Medical Diagnostic Technology Supplier Adopts Value-Based Pricing Strategy for New Product
The Challenge: An innovative molecular diagnostic technology supplier was preparing to launch a new product and identified the need for a consistent global pricing strategy. The company engaged Blue Canyon Partners to determine a pricing model and how it would position the company to be appropriately rewarded for the benefits the new product provided.
Assessment: Blue Canyon performed an in-depth strategic market analysis across ten countries to better understand how the market perceived the value of the new product. The project team learned that the market was receptive to a value-based pricing model if there was proof of financial savings and better patient outcomes. Market participants had stringent demands for evidence to support this pricing model.
Strategic Solution: Blue Canyon proposed a value-based pricing strategy that was built on the key value drivers identified in the marketplace and encouraged the company to develop the clinical and economic proof to support the strategy. The project team clarified how the company should compare its solution to competitive products in the marketplace, as well as provided guidelines on a segmenting and targeting strategy that would support the value-based pricing approach.
Results: The client has adopted the guiding principles proposed by Blue Canyon to direct its future pricing decisions. It intends to implement once the product is launched. As a result, the company is projected to command a significant price premium in the marketplace with the economic proof needed to demonstrate the value to customers to justify the premium.