Archives posted in: Pricing
High barriers to entry must be keeping competitors from providing alternatives to off-patent generic drugs. What could be the source of these barriers to entry?
It isn’t the lack of know how. Many firms are able to produce chemicals, even specialized chemicals in the life sciences. And, that is what a drug is: it is a chemical. As observed in animal health care, agricultural chemistry and many other specialty chemical companies: competition keeps prices relatively low. Yet, in human life sciences, there is insufficient competition.
Getting back to the shop-floor example: what if you realized that you ended up buying a few million dollar worth machinery but had to retain the workforce to run the machines as per requirements? In fact you ended up renting a bigger floor to accommodate the humans and machines?
More The use of comparable equivalents leads to an improvement in the meaningfulness and accuracy of the benchmark approach, yet the determination of what constitutes the comparable equivalent is made by the consultant him/herself. This approach is fraught with error. Does the lawyer think too highly of him/herself or is he/she being too timid?
More Much of this has to do with poor economic policy, the low price of oil (upon which much of Venezuela’s exports depend), and the strong dollar. In such situations, dollars become even more valuable to hoard, which in turn creates more inflation in the bolivar, leading to a positive feedback loop. But how does this lead to shortages of something as basic as toilet paper?
More Pricing strategy is not executed by simply raising prices. If that’s all it took, then every fool would do pricing strategy, and every business owner would have a clear pricing plan.
More Without a strong understanding of these customers, as well as the effort to continuously reevaluate this understanding, companies will see their share slip away to better positioned competition. Pricing requires just as much strategy as product; the right product at the wrong price is no longer the right product.
More Companies that are just beginning to build a pricing team should initially focus on defining the first year’s problems the team must address. Is it a price execution, discounting, setting, or strategy challenge, which most needs to be addressed? In some cases, the performance metric should be something correlated to profits, revenue, and share.
More If a customer doesn’t need to make design changes to change the chip in a socket they are likely to continuously engage with multiple competing suppliers – not just to get the best price but also to secure supply. In fact in some cases customers are reluctant to design in proprietary chips, as they believe that having a single supplier for a product is very risky!
More For a company, a socket means a business. When they talk about winning a “socket” they mean winning a new business. For example let’s say a product uses a microcontroller – all microcontroller companies would be fighting to win the microcontroller socket inside that product and all other such products that use a microcontroller.
More At a certain level, the method of accessing a certain music track should be a commodity — it is the track that matters, not the delivery mechanism. Instead of differentiating on price, platforms are trying to do so with exclusive artist agreements and various extras for the consumer, as well as additional marketing support for the artist.
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