Background and challenge
A leading healthcare IT (HCIT) vendor engaged L.E.K. Consulting to develop its go-to-market strategy for a new software-as-a-service clinical communication and coordination product suite. The goal was to better understand how to price its new product based on its current capabilities and understand how its pricing can shift as new capabilities are added to maximize revenue.
The client asked us to conduct a study to evaluate customers’ willingness to pay for different modules, functionality bundles and service offerings, thereby maximizing adoption and revenue uplift.
Approach
We performed a range of analytical tasks to support the client’s goals:
- Leveraged primary and secondary research to develop a thorough understanding of the market structure and customer dynamics (e.g., applications across customer type, key purchasing criteria, pricing structure preferences)
- Conducted a quantitative assessment of customers’ willingness to pay
- Assessed customer needs and purchase drivers in conjunction with client capabilities to define product functionality bundles to be tested
- Evaluated customer views on and preferences for different pricing structures, service models and implementation fees
- Leveraged a quantitative online survey to develop a robust understanding of customers’ willingness to pay for different modules, functionality bundles and service offerings
- Analyzed the competitive landscape to understand how competitor pricing varies based on product depth and where the client’s solution would place along the product depth spectrum
- Evaluated how discounting might impact pricing given the average discounting rates expected due to bundling multiple modules or the discounting necessary to incentivize customers to switch
- Performed a quantitative analysis to inform a near-term and long-term price point for the client’s solution, to maximize revenue opportunity
- Assessed how an improved articulation of the return on investment and product roadmap could support future price increases
Results
We provided the client with a specific and flexible pricing strategy for its new product, as well as insights into favorable characteristics of potential target customers. Our quantitative analysis and product roadmap enabled the client to maximize its revenue opportunity by identifying its optimal price points for the near term and long term.
For more information, please contact strategy@lekinsights.com.
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