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  • Posted by Brett Gardiner
  • October 29, 2013
  • Articles

Price and Revenue Optimisation modeling

Price and Revenue Optimisation modeling

With the increased emphasis on value-based pricing, Access Partnership has been working with a number of big pharma partners recently to deliver price models that maximise their product’s revenue potential.

Our approach utilises 3 critical pricing elements:

- pricing strategy
- the value of the product to both buyer and seller
- tactics that manage all elements impacting profitability.

During the planning phase, we ask our partners to first select the preferred optimization model and determine desired outputs and required inputs. The choice of model will depend on the product and the objective. For example, initial price optimisation works well for companies with a stable base of long life-cycle products, usually BioPharma & MedTech manufacturers who are looking to set a new price for their product launch. Promotional price optimization helps set temporary prices to spur sales of items with long life-cycles, which works well for newly introduced products, bundled products and loss leaders. Markdown optimization helps businesses selling products subject to  seasonal Government and Public health campaigns; responding to tendering and procurement strategies—Vaccine manufacturers, Prosthetic devices

Once a price model has been selected, then we work with our partners to:

- Collect historical data, including product volumes, the company's prices and promotions, competitors' prices, economic conditions, product availability, seasonal conditions and fixed and variable cost details
- Clarify the business's value proposition and set strategic rules to guide the modeling process
- Load, run and revise the model
- Establish decision-making processes that incorporate modeling results without alienating key decision makers
- Monitor results and upgrade data input to continuously improve modeling accuracy

Our rigorous approach and user-friendly tool has been successfully deployed to help leading pharmaceutical organisations develop an effective pricing strategy.

We have created a short deck of slides outlining our approach. Request your copy at info@access-partnership.com now or contact me, Brett Gardiner at 020 8069 5253 for more information. 

 

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