Healthcare Pricing Strategies and Common Mistakes

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Table of Contents

Introduction
Features of Pricing Element
Errors Incorporated in the Pricing Strategies
Pricing Strategies and the Costs Considerations
Conclusion
References

Introduction

Most consumers approach the purchase of the services rendered by certain healthcare in a manner similar to retail shopping. Therefore, most healthcare adapts to such retail-oriented pricing strategies in order to be a step ahead of their competitors. They have realized that consumers not only choose a health care service based on the price of the service but also the quality and level of such care. The purchasing decisions made by consumers are affected by the kinds of services healthcare offers. My pricing strategies will hence take into consideration the healthcare’s ability to command a significant market niche for our services (prices that will enormously attract customers). Besides, pricing is the most crucial profit determinant in the market (Feldman, 2002).

Features of Pricing Element

To start, price is the only revenue-producing element. Any other element in the market will only but represent incurred costs. Therefore, all healthcare should appropriately fix their price on the products they are offering.

Besides, price signifies the value and quantity of currency an organization charges for its product. In general, it represents the summation of values that customers exchange for using a product.

Price is considered as the most flexible factor among the set of elements in the market mix. This is to say that the prices of products are bound to change any time due to changes in discounts and allowances given to employees (Jones, 2003).

Errors Incorporated in the Pricing Strategies

Most healthcare organizations make mistakes when formulating and implementing pricing strategies. Such mistakes include cost-oriented pricing strategy, seldom revision of the formulated strategies in accordance to the market changes, unvaried prices based on the products as well as purchase occasions, and prices that partially encompass the whole marketing mix (Pesse, Erat, & Erat, 2006).

Pricing Strategies and the Costs Considerations

Taking a position in the market

The following are some of the pricing strategies that my healthcare will absorb during its pricing stage:

The low-price approach

We will focus on advancing low prices but cautiously sustaining margins on the average standards. To effect this, we will establish an advanced technology to dispense our services while being extra careful to maintain the optimal standards where enough capital will still be available to invest in other differentiating items (Pesse, Erat, & Erat, 2006).

The product-value approach

On the other hand, this strategy will be employed so as to increase as well as diversify the benefits our services will be generating. The strategy will target to meet the lifestyle expectations of most (if not all) consumers within their price brackets. My healthcare will leverage all of its service packagings to an affordable cost position.

The elite-value approach

Healthcare will avail products that are not readily found in the marketplace. This will be after we have identified products that are on high demand in the market and their corresponding profit margins. The target places include academic centers and urban settlements.

Once I identify my market position, I will come up with expectations that healthcare will work towards their achievement.

Product pricing

The strategy I will take in pricing my product will be aligned to delivering the identified market positions. My healthcare will adopt both tiered and basic product pricing strategies.

Tiered pricing

The level of the services we offer will determine the prices the consumers will pay. We will demonstrate the high level and quality services and ensure our customers perceive them as such. We will ensure we meet all standards necessary to be accredited and receive recognition as the best healthcare provider in the region. We will achieve this by valuing our customers highly, offering angel solutions and finally, being market neutral (Pesse, Erat, & Erat, 2006).

We will price our products with respect to the neutrality of the market so as to stand out as healthcare which provides services at a competitive coinsurance rate compared to other healthcare. To achieve this, we will offer services that are thought to be associated with minimal clinical risks.

We will deliver higher personal value so as to convince our customers why they should pay more. To achieve this, we will employ certified medical staff and go ahead to allocate personal physicians to our in-patients. We will also set higher customer satisfaction targets and ensure we work round the clock to implement them. We will then carry out research via questionnaires to find out how such scores are perceived (Titus, 2007).

For the angel solutions, we respond effectively to any arising severe diagnosis without being price-oriented.

Basic services pricing

We will apply different prices in different cases. As an expert, I know that an increase in the out-of-pocket deductibles will result in a shift of consumers to our competitors. We will always ensure we have a conversation strategy for customers diagnosed at risk so as to retain them, however the price of our services (Pesse, Erat, & Erat, 2006).

Conclusion

Therefore, we will employ certified medical staff and go ahead to allocate personal physicians to our in-patients.

References

Feldman, D. (2002). The Pricing Puzzle. Marketing Research, 14(4), 14-19.

Jones, J.D. (2003). Developing an effective generic prescription drug program. Benefits Quarterly, 19(1), 14-18.

Pesse, M., Erat, P., & Erat, A. (2006). The Network is the Customer: Setting the Stage for Fundamental Change in Pharmaceutical Sales and Marketing. Journal of Medical Marketing, 6, 165 – 171.

Titus, F. (2007). Price transparency’s role in healthcare purchasing reform. Frontiers of Health Services Management, 23(3), 29-31.

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