8A. Cost-effectiveness model.

Context: The medical supplier wanted to capitalise on the strong clinical evidence that differentiated their product from the competitors. This evidence was largely published in peer-reviewed clinical journals.
Actions: A user-friendly cost model was developed, using data extracted from the clinical papers, to show the relative cost-effectiveness of the product over its key competitor. The sales force was trained in the use of the cost model as well as basic health economic concepts. This helped them to address customers’ objections to a higher unit price by demonstrating cost-effectiveness.
Outcome: The credibility of the cost-effectiveness claims for the product increased, which led to an increase in sales. The sales force had a new tool in their toolbox to deal with price objections.
 
8B. Cost-in-use model.

Context: The medical supplier wanted a cost model that would show the value of their premium priced products, even where superior clinical effectiveness could not be demonstrated.
Actions: The key cost drivers associated with the use of the product were identified to be wear time and nursing time. These cost drivers were modelled into a template that enabled the cost-in-use of different products to be evaluated. The sales force was trained in using this model with customers to show the difference between product purchase price and cost-in-use. The model was also used in tender and reimbursement submissions to support prices.
Outcome: Most customers accepted the validity of the cost model and sales subsequently followed. Premium prices were approved in contract and reimbursement decisions. The sales force had a new tool in their toolbox to deal with price objections.
 
8C. Cost model – price per unit of active ingredient.

Context: The medical supplier had a product with a significantly higher unit price than competitor products and wanted to justify this price to customers.
Actions: The purchase prices of the supplier’s and key competitors’ products were correlated to the level of active ingredient in each product. This differentiation makes sense intuitively and has apparent clinical benefits. A cost model was developed and the sales force was trained to implement this ‘price per unit’ approach to show customers the value they were getting for their money.
Outcome: Most customers accepted the cost model, which led to an increase in sales. The sales force had a new tool in their toolbox to deal with price objections.
 
8D. Cost model – price per area of usable dressing.

Context: The medical supplier had an adhesive wound dressing with a higher purchase price than competitor products and wanted to justify this price to customers.
Actions: A cost model of ‘usable dressing area’ was developed on the basis of the usable surface area of the supplier’s and key competitors’ dressings. This differentiation has clear practical benefits in the clinical setting. The sales force was trained in using this model and introducing this ‘value for money’ concept with customers.
Outcome: Most customers grasped the concept and, as a consequence, sales increased. The sales force had a new tool in their toolbox to deal with price objections.
 

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