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Advice You - Tips on Pricing Your Product or Service
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”
--Henry Ford
While pricing your product or service is an important consideration, I think it receives way too much emphasis
While pricing your product or service is an important consideration, I think it receives way too much emphasis
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
and attention. Yes, you need to price your product/services wisely… after all, you’re in business to earn profits. The problem arises when business owners hyper focus on pricing, instead of value.
Below are some general tips on pricing… However,
Below are some general tips on pricing… However,
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
t’s important that you note the following:
1. I am hesitant to recommend universal pricing strategies for all products and services because critical variables differ significantly by industry, geography, personal goals, size, location, and man
1. I am hesitant to recommend universal pricing strategies for all products and services because critical variables differ significantly by industry, geography, personal goals, size, location, and man
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
other reasons. But since you understand your resources, costs, forecasts, and goals better than anyone, you’ll have to fill in the blanks.
2. I am not an expert in business (or personal) finance. This website is devoted to helping you become
2. I am not an expert in business (or personal) finance. This website is devoted to helping you become
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
an excellent marketer. So, while it’s appropriate that I cover pricing and financial planning as part of the marketing process it would be irresponsible to delve much further.
Tips:
√ Make sure you consult with an objective financial advis
Tips:
√ Make sure you consult with an objective financial advis
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
r… one that specializes in small business investment capital, cash flow management, and the like. Many, many small businesses go under due to lack of proper funding. Make sure you have enough money, particularly in the first couple of years, to
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
eather unexpected storms.
√ Arrive at ballpark pricing by assigning costs by product. You can start with your costs and work up or begin with a proposed price and work back. Here’s an illustration how of this works:
Let’s assume I am (once
√ Arrive at ballpark pricing by assigning costs by product. You can start with your costs and work up or begin with a proposed price and work back. Here’s an illustration how of this works:
Let’s assume I am (once
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
again) a widget retailer and the following is true…
Money I receive when I sell one widget $10.00
* Less labor and materials (costs to produce one widget) or my cost of goods sold (COGS)
* Labor (yours or anyone else’s)
Money I receive when I sell one widget $10.00
* Less labor and materials (costs to produce one widget) or my cost of goods sold (COGS)
* Labor (yours or anyone else’s)
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
- 2.00
* Materials - 1.00
Gross Profit (amount of money I’m left) $7.00
This means my gross profit margin is 70%
* Less Administrative Costs (ren
* Materials - 1.00
Gross Profit (amount of money I’m left) $7.00
This means my gross profit margin is 70%
* Less Administrative Costs (ren
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
, utilities, office supplies,
furniture, mgmt. salaries, etc.) - .80
* Less Marketing (signage, advertising, on-hold music,
business cards, specialty ad items, etc.) - 1.20
Net
furniture, mgmt. salaries, etc.) - .80
* Less Marketing (signage, advertising, on-hold music,
business cards, specialty ad items, etc.) - 1.20
Net
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
Margin (before taxes) $5.00 50%
How do you assign administrative and marketing costs by product? Simply divide the total amount you’ve spent in each category over a specific period of time. Then figure out what perce
How do you assign administrative and marketing costs by product? Simply divide the total amount you’ve spent in each category over a specific period of time. Then figure out what perce
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
ntage of your total budget (for the same period of time) they represent. Deduct that percentage amount off your sales price.
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales
For example, let’s say I sold $500,000 worth of products last year. Of that, my $10-widget accounted for 50% of the sales
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
or $250,000. My total administrative and marketing outlays only were $100,000.
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on mark
Since my $10-widget was 50% of my business I’ll assign that product the same percentage of costs, or $50,000… $20,000 for administrative expenses and $30,000 on mark
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ting. Based on earning of $250,000 I should deduct $20,000 or 8% for administrative costs, and $30,000 or 12% for marketing expenses - $.80 and $1.20 respectively.
Please do not assume that any of these are standard percentages… they vary widely.
Please do not assume that any of these are standard percentages… they vary widely.
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
If your company is new you’ll obviously have to use your forecast financials.
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categori
√ Perceptual Pricing Categories… A simple way to begin pricing for start-ups, is to put your products, services or company into one of three perceptual categori
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
s.
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group cons
The first is the “elite” group. These businesses are considered ‘upper crust’ (outstanding services, exceptional products, exquisite environment, and other factors) and their products or services are priced accordingly.
The second group cons
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
sts of the A- to B+ companies. Their pricing is competitive with others in their industry… whether that’s ‘steep or cheap’. Most small businesses fit into this category.
The third-class of companies fit into the “plain-folk-down-home-workingman
The third-class of companies fit into the “plain-folk-down-home-workingman
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
” pricing strategies group. They are symbolic of the outlet mind-set but once again, this is no reflection on their products’ value or quality.
At first glance these might appear arbitrary and silly, but place your company into one of the three
At first glance these might appear arbitrary and silly, but place your company into one of the three
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
ategories. (Remember, while each appeal to different audiences they are equally valid and offer comparable value in the marketplace.)
Next, use the objective product pricing you’ve already established and check to make sure it’s in line with othe
Next, use the objective product pricing you’ve already established and check to make sure it’s in line with othe
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
companies in your group. If so, reduce the selected price by a small amount… $1.00 to $5.00 is usually enough.
This is a simple and brilliant way to ensure that you, your customers and your wallet are thrilled … and you’re not competing on price
This is a simple and brilliant way to ensure that you, your customers and your wallet are thrilled … and you’re not competing on price
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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