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competitive pricing strategy

Adopting Competitive Pricing Strategy in Healthcare: What to Keep in Mind

For healthcare companies to attain a healthy profit margin and ensure quality outcomes, it is essential to connect their pricing strategy with the day-to-day operational concerns. With the rising healthcare market competition, healthcare companies must be cautious while creating and implementing their competitive pricing strategies as overlooking even small factors can cause them to lose out on their competitive advantage. Competitive pricing strategy in healthcare does not necessarily mean a race to the bottom in order to offer the lowest prices. In this blog, experts at Infiniti explain the key factors that enable healthcare organizations to create a robust competitive pricing strategy.

Whether you charge higher or lower prices than your competitors, you must have a value proposition that justifies those prices. Request a free proposal to know how we can help your business identify and set optimum prices for your products and services.

Building a robust competitive pricing strategy in  healthcare

competitive pricing strategyEstablish market identity

Many healthcare organizations are under the misconception that a competitive pricing strategy has got to do primarily with becoming a low-cost or low-price player. Although some low-acuity services such as imaging may require a low-cost option structure, healthcare systems may continue to provide care at historical rates for other services. Moreover, organizations must also seek to understand what their current market identity is and what they want it to be in the future.

Facing trouble with your current pricing strategy? Get in touch with our experts for more insights on how you can transform your existing pricing strategy.

Proactive process to maintain margins

Healthcare organizations need to proactively review prices in order to isolate and resolve any potential margin issues before risk to revenue or compliance occur. It is vital to emphasize on improving key service lines and identifying margin and compliance risks by payer and service lines. Healthcare organizations must also focus on educating their staff on key issues so that charge capture violations can be easily prevented.

Engage in meaningful interactions

Several organizations resort to the practice of using tools to establish their competitive pricing strategy. However, these tools often fail in terms of adjusting to price sensitivity in the market. Although tools prove to be beneficial in building a competitive pricing strategy, it is insufficient to create an overall competitive advantage in the market. While interacting with consumers online, healthcare companies have a unique opportunity to deepen consumer relationships. Providing value messaging, online scheduling, or a live chat option are ways to create meaningful interactions with customers. Furthermore, healthcare organizations can also create a seamless customer experience with flexible payment options as a part of their competitive pricing strategy.

Price transparency to create value

Giving patients a clear idea of what exactly they are being charged on is an effective competitive pricing strategy that can induce patient loyalty. Being transparent with prices can also help healthcare organizations to increase their customer base on a larger scale. Ensuring transparency is pricing is one of the best ways to communicate value to customers and increase consumer confidence towards the organization.

To learn more on the right competitive pricing strategy for your business

Product pricing strategies

Pricing a New Product: The Right Product Pricing Strategies to Follow

Charging a lesser price for a new product may not always be a good decision.

One of the key questions to answer while launching a new product is- how much should the product be priced at? But the dilemma that most companies face here is that if they charge too much for a new product it won’t sell, and if the product is priced too low the product’s market value proposition becomes low. Moreover, once companies decide on their initial product pricing strategies and a price is set for a product, it becomes extremely difficult to raise prices.

Today, businesses and consumers alike are demanding more for less, making it even more difficult for brands to formulate product pricing strategies that are favorable to all the parties involved. Global competition, increased pricing transparency, and lesser market entry barriers across industries are forcing brands to rethink their new product pricing strategies. Before zeroing in on their product pricing strategies, companies must have a clear estimate of the highest and the lowest price that they could charge for a product. Then a detailed price-benefit analysis must be undertaken during the preliminary stages in the product development cycle. This not only shows companies whether price barriers might make products unfeasible but can also guide their development by indicating the product attributes for which customers may be most willing to pay for.

Planning a new product launch? Request a free proposal to know how our experts can help you build successful product pricing strategies with effective market insights that you may have overlooked.

Product pricing strategies for a new product

Product pricing strategiesSome of the key product pricing strategies that can be used for a new product include:

Segmentation pricing

Pricing a new product could often prove to be a challenging task. An important tactic that can be followed by companies is to set different prices for different market segments. In order to enhance profits, markets can be split into sectors based on differences in price sensitivity. Higher prices can be charged to those who are impervious and lower prices to the more price sensitive customers.

Penetration pricing

Companies often get tempted to build market share, especially with the launch of every new product, through aggressively low prices. This competitive product pricing strategy is known as penetration pricing. However, a fixation on volume could reduce profitability and consequently ignite a price war. As a result, it is generally advisable to keep upward pressure on prices and promote good industry pricing behavior. On rare occasions, however, the price lever may be an effective tool to undermine competition.

Not sure about the right product pricing strategy for your new product? Request a free brochure to learn more about our solutions and how they can help enhance your new product pricing strategy.

Cost compression curve pricing

Cost forecasting for pricing new products is based on the cost compression curve, which relates the actual manufacturing cost per unit of value added to the cumulative quantity that is produced. This cost function is mainly the consequence of cost-cutting investments to discover and achieve internal substitutions, automation, worker learning, scale economies, and technological advances. Usually, these move together as a logarithmic function of accumulated output. Such product pricing strategies are highly effective when the product superiority over rivals is minimal and when entry and expansion by competitors is easy and probable.

Learn more about Infiniti’s new product pricing strategies

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