Basic Pricing for a Healthcare SaaS startup
The product is a healthcare SaaS product which saves money for small clinics. Let's say we can get really confident estimates of how much money we're saving them each month, based on a pilot. Is there an industry standard "percent-cut" calculation to price the service? Maybe a different method is more standard?
Thanks!
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I'm sure you already know this, but just be careful. Healthcare in the US and most of the world is regulated *extremely* carefully. Things *always* cost more than it seems like they should. Just make sure you do due diligence and that you're doing all of the things the laws require you to do. That's where most of your money and time will go to, I'd suspect. – rbwhitaker 12 years ago
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Don't let @rbwhitaker scare you away, it's not that bad :) – Simple As Could Be 12 years ago
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@SimpleAsCouldBe: You're right. It's not all bad. The point wasn't to scare, just to urge caution, and careful attention to detail. – rbwhitaker 12 years ago
1 Answer
There are fundamentally two different ways to justify prices:
- Cost Plus Pricing, where you say, "Gosh, it cost us $2 to make this widget, so we are going to sell it for $2.50"
- Value Based Pricing, where you say, "Gosh, this widget saves you $10, so you should be willing to spend up to $9.50 to buy it, because it's still worth it for you."
In practice Value Based Pricing is extraordinarily rare to see in the wild, and you can only pull it off if you are a true monopoly provider. If you are in a market with two vendors and you try to charge for the full value that your product provides, the other vendor can lower their price by one penny and take 100% market share, as long as they are not losing money, so the price rapidly converges on the Cost Plus price.
Thus it's usually safe to assume that your price is going to be based on Cost Plus.
Pricing is a huge and complicated field. Read my blog post Camels and Rubber Duckies for a very superficial primer.
