Striking the right balance
As a start-up, you want to price your innovation as appropriately as possible. Often, there is a wide range between the lowest price you could charge and still cover your costs, and high-priced competitors that represent the ceiling of what you could charge.
Finding that “sweet spot” where you maximize your potential revenues while still being seen as a good value is challenging. Obviously, there are certain known values, such as your input costs, the prices of competitors, and the portion or amount that is reimbursable by payers.
Ultimately, however, to correctly price your innovation you need to know what your solution is “worth” to your customers. That means you must understand its value.
How can we get a better handle on our value?
Convincing a health system or a payer that your innovation is “worth” it requires that you demonstrate to them that the benefits they will receive will be greater than the costs they will incur. And these encompass more than just your price. For example, you will want to consider:
- The cost and burden of the current situation (the gap in care you seek to address)
- The financial benefits one gains from reducing or eliminating that gap
- The cost (price) of your innovation and any additional necessary costs to implementation
- The non-monetary costs associated with changing the care pathway or disrupting current work flows
- The non-monetary benefits from improvements in clinical outcomes and quality of life
- And so on…
Each of these (and others) are nuanced and depend on the perspective (who receives benefits or incurs costs), magnitude, measurability, level of direct attribution to your innovation, and associated risk or uncertainty, among other factors.
Accurately reflecting value can be an arduous task.
However, there are steps you can take. In addition to the articles and resources available on this site, below are two options you may want to explore:
You may also want to consider a free introductory call to talk about your unique situation. You can request a call by clicking the button below. Whatever you do, we may be able to help, even if it is just to point you toward other resources that you need!