Case Studies

Putting a Price Tag on Service...

Identifying a pricing strategy for a new service delivery model

SITUATION

A U.S.-based leader in market access intelligence and research for the pharmaceutical and biotech industries was facing an increasingly challenging competitive environment. A flood of new entrants had penetrated the marketplace, which served to erode price points, decrease differentiation, and essentially “commoditize” the syndicated research market for pharmaceutical and biotech companies. In response to these challenges and threats, the company was seeking to identify a new service delivery model—one which would help transform its offering and relationship with clients from data provider to business consultant. Central to the model was the notion of engaging with clients through a broader “business question” (as opposed to data requirement) lens. Our work centered on identifying a pricing strategy for the new business model that defined the optimal offer configuration and respective price points for service bundles. The optimal solution needed to maximize profitability while simultaneously continuing the company’s historic double-digit topline growth rate.

ACTION

The FullSurge team began by identifying three distinct hypotheses for pricing strategy. Each hypothesis was consistent with the above-stated goal of increasing profitability while maintaining topline growth, but differed in its approach for doing so. We then worked closely with a quantitative research vendor to design and conduct Adaptive Choice-Based Conjoint (ACBC) research in order to test the validity and appeal of various offer bundles and price points within each pricing strategy hypothesis.

Once the research was complete, a simulator tool was developed that enabled us to run scenarios that measured the purchase intent and associated profitability of various pricing strategies. Ultimately, our team arrived at a solution, which included detailed recommendations for the optimal: 1) number of pricing tiers, 2) services to be provided for each pricing tier, and 3) price point ranges for each tier. Additionally, we made recommendations for the “a la carte” pricing of services outside of established tiers and strategies for additional bundling and discounting options.

RESULT

The strategic pricing recommendations were presented to the firm’s leadership team during a two-day executive workshop. The recommendations were embraced with minor modifications and launched several weeks later to the company’s national sales force.

 

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