Pricing 101 - Tools to Better Capture Medical Customer Insights
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MEASURING the VOICE-OF-CUSTOMER in HEALTHCARE Pricing 101: Tools to Better Capture Medical Customer Insights 1
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Transcript of Pricing 101 - Tools to Better Capture Medical Customer Insights
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MEASURING the VOICE-OF-CUSTOMER in HEALTHCARE
Pricing 101: Tools to Better Capture Medical Customer Insights
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Who We Are
SELECT CLIENTS:
19 Years in Business
QUICKFACTS
2 Global Offices
9 International Partnerships
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The Program
1. Pricing 101 – Today
a) Pricing Considerations
b) Cascading Price
c) Van Westendorp
2. Pricing 201 – September 10, 2015
a) Preference Modeling & Conjoint
b) Market Modeling
TMTG - Pricing 101
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In 45 minutes, you will learn …
Methodologies to extract WTP
Advantages & disadvantages of pricing methodologies
Selecting a technique to meet your objectives
Overview of pricing for fixed attributes
Price your
product to
meet your
goals
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2 3
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TMTG - Pricing 101
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Pricing Considerations: What?TMTG - Pricing 101
Product Placement Promotion
PRICE
Declarative Pricing Challenge
$Unique Healthcare Complications:
o Reimbursemento 3P’s Challenge:
Provider/Payer/Patiento Clinical vs. Economic Drivers
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Pricing Considerations: Why?TMTG - Pricing 101
Need to understand how to capture the value of:
o Better clinical outcomeso Increased patient throughputo Improved patient satisfactiono Shorter patient stayso Alternative treatmentso Additional or different reimbursements
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Pricing Considerations: Who?TMTG - Pricing 101
Clinicians+++?---
Understand BenefitsUnderstand Value Proposition
Understand Medical ImplicationsUnderstand Operational Implications
Know PricesKnow ReimbursementsUnderstand TCO, NPV
Purchasing & Service Line Managers
??-+++?
You may need to query Nurses, CFO, CEO, Imaging Director, etc.
Ensure that your (combination of) respondents:• Understand the relevant pricing model• Understand the clinical value• Understand the relevant decision process
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What price to test?TMTG - Pricing 101
The price to be tested must be unambiguous
Capital Equipment:o Siting costs?o Training?o Service plan?o Financing options?o Consumables?o Updates/Upgrades?
Consumables:o Individual or box?o Unit or kit price?o List or ASP?o Inventory?
IT/Software:o Scale: per unit/hospital/user?o Service/Support?o Updates/Upgrades?o Installation/V&V?o Subscription/Lease/Purchase?
Consider the customers’ default assumptions
$$
$$
$
$
$$
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The price to be tested must reflect the customers’ knowledge at purchase decision time
Description CPT Code Medicare FeeCBC (with automated Hgb, Hct, RBC, WBC, platelet) plus automated diff
85025 $11.02
CBC as above without diff 85027 $9.17Hemoglobin, automated 85018 $3.35Hematocrit, automated 85014 $3.35Platelet, automated 85049 $6.33
For per-test prices, from the 2012 Medicare Fee Schedule, blood test rates are:
US2D C-arm: $150-250,0003D C-arm: $200-350,000Movable CT scanner: $300-750,000MRI scanner: $1.2-3,000,000Full-size fixed CT Scanner: $750-2,000,000
X-ray imaging equipment ranges from plain X-ray to large fixed CT scanners. Prices of these systems may or may not include siting costs for a facility. Excluding siting costs, these systems range in price as shown below:
Ex: Capital Equipment (CT Scanner)
Ex: Consumables (POCT, CBC)
GB EU£95-160,000 €113-190,000£130-225,000 €150-265,000£195-485,000 €225-565,000£780-2,000,000 €900-2,250,000£485-1,300,000 €565-1,500,000
To anchor or not to anchor?TMTG - Pricing 101
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Overview of methodologiesTMTG - Pricing 101
Pricing 101:o Declarativeo Cascading Priceo Van Westendorp
Pricing 201:o Choice-based
Trade-offso ACBC & BYO
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Declarative Price MethodologiesTMTG - Pricing 101
— Fixed attribute offerings only
— Does not allow scenario modeling
— Outliers & erroneous responses
+ Efficiency
+ Easy to understand
+ Straightforward results
+ Answers to specific questions (price range, WTP, adoption)
Disadvantages Benefits
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Cascading PriceTMTG - Pricing 101
Cascading PricingBest when an approximate price is known
Test of willingness to pay
Fixed product configuration(s)
Not at all likely (no likelihood of purchase at this price)
Somewhat Likely (at least a 25% likelihood of purchase at this price)
Likely (about a 50% likelihood of purchase at this price)
Very likely (at least a 75% likelihood of purchase at this price)
Extremely likely (at least a 90% likelihood of purchase at this price)
S4Q2A: How likely would your office or clinic be willing to pay $400,000 for this system? (Please keep in mind that the price includes warranty, installation, and training for the first year).
S4Q2B: Repeat question at $300,000
S4Q2C: Repeat question at $200,000
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Willing to pay at least $400,000 Willing to pay at least $300,000 Willing to pay at least $200,000 0%
20%
40%
60%
80%
100%
9%
32%
49%
9% 9%
23% 23%
0.170212765957447
Series4
Extremely or Very likely to pay $200,000
Extremely or Very likely to pay $300,000
How likely would your office or clinic be willing to pay $400,000/$300,000/$200,000: (N = 47)
Perc
ent
Sele
cted
Cascading PriceTMTG - Pricing 101
Cascading Pricing
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van WestendorpTMTG - Pricing 101
Best for determining acceptable price range
Testing customer knowledge of reasonable price levels
Fixed product configuration(s)
Van Westendorp Price Sensitivity Meter
At what price would this product...
...become so expensive that you would not even consider it? [TOO EXPENSIVE]
...become too cheap, such that you would question its quality? [TOO CHEAP]
...start getting expensive, but still be worth considering? [EXPENSIVE]
...be such a bargain that you would consider it a great deal? [BARGAIN]
Classic van Westendorp
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$5
$15
$25
$35
$45
$55
$65
$75
$85
$95
$10
5
$11
5
$12
5
$13
5
$14
5
$15
5
$16
5
$17
5
0%
20%
40%
60%
80%
100%
120%Bargain (Inexpensive)ExpensiveToo ExpensiveToo Cheap
Price US $000's
Cu
mu
lati
ve
Pe
rce
nt
Acceptable Price Range
van WestendorpTMTG - Pricing 101
PMC
PME
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van Westendorp: vwPRO™ TMTG - Pricing 101
QBar. If this new product was offered at [b price], how likely would your private practice be to purchase it?
QExp. If this new product was offered at [c price], how likely would your private practice be to purchase it?
o No chance, almost no chance (1%)o Very slight possibility (10%)o Slight possibility (20%)o Some possibility (30%)o Fair possibility (40%)
vwPRO™ (van Westendorp PRO) Enhancement to capture PURCHASE LIKELIHOOD:
Best for determining acceptable price range
Testing customer knowledge of reasonable price levels
Fixed product configuration(s)
Does NOT indicate purchase likelihood
Van Westendorp Price Sensitivity Meter
o Fairly good possibility (50%)o Good possibility (60%)o Probably (70%)o Very probably (80%)o Almost sure (90%)o Certain, practically certain (99%)
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van WestendorpTMTG - Pricing 101
vwPRO™ Van Westendorp Price Sensitivity Meter
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SummaryTMTG - Pricing 101
o Set Objectiveso Select & Screen Respondentso Select Methodologyo Define Priceo Design, Field, QCo Interpret Correctly
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PreviewTMTG - Pricing 201
Pricing 201
o Choice-Based Conjoint (CBC) Modelingo BYO & ACBCo Preference Modeling for Price Sensitivityo Market-calibrated Modeling for Price, Profit
& Market Share
DATE: Thursday, September 10, 2015TIME: 2:00 PM Eastern / 11:00 AM Pacific
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MARKETS SERVED
MEDICAL IMAGING
METHODOLOGIES
GO-TOMARKET
EXECUTION
SALES & MARKETINGCOMMUNICATION
PRICINGOPTIMIZATION
NEWPRODUCTROADMAP
MARKETOPPORTUNITYASSESSMENT
Qualitative
MEDICAL DEVICES AND DIAGNOSTICS HEALTHCARE IT PHARMACEUTICAL INDUSTRIES TECH TRANSFER
MEASURING the VOICE-OF-CUSTOMER in HEALTHCARE
Quantitative
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