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Pricing strategies and decisions @ baba
 

Pricing strategies and decisions @ baba

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Pricing strategies and decisions @ baba

Pricing strategies and decisions @ baba

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  • 1
  • 3 Key Words: transparency, price takers, reference prices, price-quality inferences, price cues
  • 4 Key Words: markup pricing, target-return pricing, value pricing, quality buyers, price buyers, loyal brand buyers, going-rate pricing
  • 5 Key Words: survival, maximum current profit, current performance, long run performance, maximum market share, marketing penetration pricing, predatory pricing, market skimming, product quality leaders, price sensitivity, total cost of ownership, estimating demand, price elasticity of demand, inelastic, elastic, price indifference band, fixed costs, variable costs, total costs, average cost, anticipated cost, experience-curve pricing, direct cost, indirect cost, target costing, cost-benefit analysis, pharmacoeconomic analysis
  • 6 Key Words: shadow pricing, 3Cs
  • 7 Key Words: net price analysis, loss-leader pricing, special-event pricing, seasonal discounts, cash rebates, low-interest financing, longer payment terms, warranties and service contracts, psychological discounting, price discrimination, first-degree price discrimination, second-degree price discrimination, third-degree price discrimination, customer-segment pricing, product-forming pricing, image pricing, channel pricing, location procing, time pricing.
  • 8 Key Words: anticipatory pricing, over demand, delayed quotation pricing, escalator clauses, unbundling, reduction of discounts, reduction of size
  • 9 Key Words:
  • 10 Key Words: procedure, price, diagnosis, CPT-4, HCPCS, ICD, medical expense ration, premium, certificate of insurance, deductible, coinsurance co-payment
  • 11 Key Words:

Pricing strategies and decisions @ baba Pricing strategies and decisions @ baba Presentation Transcript

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