Pricing
Pricing is critical to your product’s success and determining the appropriate price is a delicate balance to maximise both profits and access in a regulated environment.
Developing the pricing strategy for health technology is complex and requires you to take multiple aspects and benchmarks into consideration including the cost of goods sold (COGS), the market price level set by the competitors in your target market, the value your product brings and the health economic and clinical evidence you have to demonstrate this value and help your customers understand their ROI and your financial objectives.
The typical pricing strategies used are:
Cost-plus pricing: calculate your costs and add a markup.
Competitive pricing: set a price based on what the competition charges.
Price skimming: set a high price and lower it as the market evolves.
Penetration pricing: set to gain adoption rapidly
Value-based pricing: set based on the product benefits perceived by customers
Value-based pricing is often the desired option, as it enables you to charge a price premium based on the value of your innovation, provided you have adequate evidence.
Initial ‘price setting’ needs to be based on robust data and market research and will be followed by ‘price getting’- deploying your price to the market, followed by ‘price netting’ to ensure that you optimise profit and manage price pressures and erosion.
Best Practices
Leverage our deep knowledge and tested strategies.
Diagnose the critical constraints and opportunities for your product in your target market and the price sensitivity of your target customer.
Define the dimensions of your pricing strategy: outline the value proposition of your product, the strength of clinical and economic evidence and level of differentiation in addressing the unmet need in your market as well as customer segmentation and strength of customer relationships.
Develop segment-specific, flexible pricing. This will be highly dependent on expected reimbursement levels and customer pricing elasticity. Take the value chain in your customer ecosystem into consideration to understand the impact of your price.
Design a strategy for successful internal and external execution. This should include messaging for customers, training for commercial teams and a good governance system to manage ‘price getting’, including discount strategies.
Deploy, manage and monitor your pricing model. This needs to be an ongoing process based on changes in the economic environment, your target market and competitors and your product and evidence which may evolve over time.
Get in touch
Get in touch to discuss how Hardian Health can help you with your pricing strategy.