Pricing Strategies and Decisions
LEARNING OBJECTIVES <ul><li>How do health care consumers, providers, and companies process and evaluate prices? </li></ul>...
LO1. How do health care consumers, providers, and companies process and evaluate prices? <ul><li>Reference prices </li></...
LO2. What are the different methods and seven steps for setting an initial price for a product or service? <ul><li>Method...
LO2. What are the different methods and seven steps for setting an initial price for a product or service? (cont) <ul><li>...
LO2. What are the different methods and seven steps for setting an initial price for a product or service? (cont) <ul><li>...
LO3. How should prices be adapted to meet varying circumstances and opportunities? <ul><li>Geographical pricing - by loca...
LO4. When should an organization initiate a price change? <ul><li>Increase price to maintain profits </li></ul><ul><li>Ov...
LO5. How should an organization respond to a competitor’s price change? <ul><li>Maintain price and profit margin </li></u...
LO6. What influence do government and private payers have on pricing decisions? <ul><li>Government </li></ul><ul><ul><li>...
CONCLUSION <ul><li>Seemingly little logic to health care pricing and distribution </li></ul><ul><li>Task of setting pric...
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Pricing strategies and decisions @ baba

Pricing strategies and decisions @ baba
Published on: Mar 4, 2016
Published in: Health & Medicine      Business      
Source: www.slideshare.net


Transcripts - Pricing strategies and decisions @ baba

  • 1. Pricing Strategies and Decisions
  • 2. LEARNING OBJECTIVES <ul><li>How do health care consumers, providers, and companies process and evaluate prices? </li></ul><ul><li>What are the different methods and seven steps for setting an initial price for a product or service? </li></ul><ul><li>How should prices be adapted to meet varying circumstances and opportunities? </li></ul><ul><li>When should an organization initiate a price change? </li></ul><ul><li>How should an organization respond to a competitor’s price change? </li></ul><ul><li>What influence do government and private payers have on pricing decisions? </li></ul>
  • 3. LO1. How do health care consumers, providers, and companies process and evaluate prices? <ul><li>Reference prices </li></ul><ul><li>Price-quality inferences </li></ul><ul><li>Price cues </li></ul>
  • 4. LO2. What are the different methods and seven steps for setting an initial price for a product or service? <ul><li>Methods </li></ul><ul><ul><li>Markup pricing </li></ul></ul><ul><ul><li>Target-return pricing </li></ul></ul><ul><ul><li>Value pricing </li></ul></ul><ul><ul><li>Going-rate pricing </li></ul></ul>
  • 5. LO2. What are the different methods and seven steps for setting an initial price for a product or service? (cont) <ul><li>Steps </li></ul><ul><ul><li>Selecting the pricing objective </li></ul></ul><ul><ul><li>Determining demand </li></ul></ul><ul><ul><li>Estimating costs </li></ul></ul><ul><ul><li>Analyzing competitors’ costs, prices, and offers </li></ul></ul><ul><ul><li>Deciding whether to use price as a competitive strategy </li></ul></ul><ul><ul><li>Selecting a pricing method </li></ul></ul><ul><ul><li>Selecting the final price </li></ul></ul>
  • 6. LO2. What are the different methods and seven steps for setting an initial price for a product or service? (cont) <ul><li>To set prices </li></ul><ul><ul><li>Customers’ demand schedule </li></ul></ul><ul><ul><li>Cost function </li></ul></ul><ul><ul><li>Competitors’ prices </li></ul></ul><ul><li>Steps </li></ul><ul><ul><li>Costs set a floor to the price </li></ul></ul><ul><ul><li>Competitors’ prices and the price of substitutes provide an orienting point </li></ul></ul><ul><ul><li>Customers’ value assessment of unique features establishes the price ceiling </li></ul></ul>
  • 7. LO3. How should prices be adapted to meet varying circumstances and opportunities? <ul><li>Geographical pricing - by location </li></ul><ul><li>Price discount and allowances - ie. early payment, volume purchases, and off-season buying allowances and discounts </li></ul><ul><li>Promotional pricing - to stimulate early purchase </li></ul><ul><li>Differentiated pricing - to accommodate differenced in customers, products, and location </li></ul>
  • 8. LO4. When should an organization initiate a price change? <ul><li>Increase price to maintain profits </li></ul><ul><li>Overdemand and cannot supply all customers </li></ul><ul><li>Reduce to remain market leader </li></ul>
  • 9. LO5. How should an organization respond to a competitor’s price change? <ul><li>Maintain price and profit margin </li></ul><ul><li>Maintain price and add value </li></ul><ul><li>Reduce price </li></ul><ul><li>Increase price and add brands </li></ul><ul><li>Launch a low-price line </li></ul>
  • 10. LO6. What influence do government and private payers have on pricing decisions? <ul><li>Government </li></ul><ul><ul><li>Congress sets method of payment and rates change over time </li></ul></ul><ul><ul><li>Centers for Medicare and Medicaid Services administer pricing schemes </li></ul></ul><ul><ul><li>Prices set by procedure, product, diagnosis </li></ul></ul><ul><ul><li>Coding systems in place </li></ul></ul><ul><li>Private payers </li></ul><ul><ul><li>Insurance determines medical expense ratio </li></ul></ul><ul><ul><li>Consumer is responsible for premium, deductible, co-insurance, and co-payment </li></ul></ul>
  • 11. CONCLUSION <ul><li>Seemingly little logic to health care pricing and distribution </li></ul><ul><li>Task of setting prices differs by who is paying </li></ul><ul><li>Pricing is adjusted by additional factors </li></ul><ul><li>Government set many prices </li></ul><ul><li>Private insurances want to be competitive </li></ul>

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