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When was the last time you gave a passing thought to your pricing? It’s no secret that how you charge for your services can either make or break you. It can mean the difference between a mediocre and a succe

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

ssful business. In my experience, most people don’t spend enough time thinking strategically about what pricing strategy they should use.

The majority of people in service businesses - and especially people

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

who work independently - establish an hourly rate. They use a process called “reverse competition” to determine what their rate should be. This involves taking a look at what your geographical competitors a

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

e charging, and deciding where in the range you want to fit on the spectrum of hourly rates. Inevitably, we choose a rate somewhere in the middle, so we can say that we’re not the most expensive, but neither

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

are we the cheapest!

With this approach we are showing absolutely no differentiation from any other company – just sticking ourselves straight down the middle. In other words, we compete with everyone! Not

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

a very prudent marketing decision. So pricing simply using an hourly rate that sits in the middle of the spectrum is, in my view, a wasted opportunity to create a point of difference.

Getting Away fro

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

the Hourly Rate Mentality

Before you do business with a new customer, you hold all the leverage in the relationship. After the services have been performed, the customer possesses the leverage. The le

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

sson is that you want to set your prices when you possess the leverage - before the engagement begins.

The minute you quote an hourly rate, you put a fixed limit on your earning potential. It’s hard

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

to increase an hourly rate once it has been set. The most successful service providers charge for the job as a whole, and then don’t specify exactly how many hours it will take to complete the job.

Customer

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

are value conscious, not price conscious. They look to do business with people they feel give them more than they are paying for. So your goal is to make sure your customer perceives the full

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

value of the service, not simply the price component. Your services need to be packaged up and sold as a valuable bundle, rather than as a multiple of hours which only reflects the time value of money.

Let

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

’s say you needed a consultant to analyse the effectiveness of your intranet site, and make some recommendations about modifying the navigation structure. Which would you feel more encouraged to purchase?

C

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

st of analysing site and recommending new structure: Estimate 20 hours work @ $150 per hour = $3000

OR

Phase 1: Analysis of Existing Intranet Site: includes $7800

• 8 hours of interviews with high

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

end users
• analysis of site map
• analysis of internal complaints and suggestions
• detailed report outlining strengths and weaknesses of the current functionality
• identification of po

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

tential cost savings through structure modification

Phase 2: Recommendation for Improving the Proposed Structure: includes $6400

• Focus groups with users to identify preferred structure options
• R

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

peated testing of proposed structure with a wide variety of users
• Refining preferred structure based on user feedback
• Detailed report on recommended navigation changes, including rationale for

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

each decision

Price is a Fickle Indicator

There is absolutely nothing positive about competing on price, unless you specifically position yourself as a low-cost provider. No matter what you charge,

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

there is always someone, somewhere, willing to perform the work for less money.

Wise entrepreneurs also know that if they price their services at the low end of the market, customers do not take their advi

.

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

e seriously. On the other hand, if you charge rates on the upper end of the spectrum, the customer will hang on every word you say and has a higher probability of implementing your suggestions.

So do yourse

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

lf a favour. Start to think of how you can price and package your services in ways that don’t correspond to hourly rates. It’s all about value you provide, and the perception of value in your customers’ mind

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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