Customer Oriented Pricing for Medi Cult

Abstract

Medi-Cult the biotech company from Denmark has an alternate of IVF that is IVM, it is a cheaper option but more importantly, it does not include hormonal stimulation. And hormonal stimulation is the most uncomfortable phase and causes side effects like nausea, mood swings, general discomfort etc. Medi-cult has skipped this step and does not cause these side effects. That does make IVM more effective, but at least women might be willing to try again if the first attempt goes to waste. We will try to discuss the economic value and will try to determine a price for the procedure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What are the sources of economic value for IVM vs. IVF?

Per-cycle of IVF costs $9000 that includes – IVF treatment cost – $5000, Cost of hormones – $3000, Lab work cost – $500 and Misc cost – $500. The hormonal stimulation process has side effects such as nausea, mood swings, general discomfort etc. These site effects cause loss of work days and in 2% of cases hospitalization. Moreover, this procedure lasts for 30 days.

So we can safely conclude that the cost of IVF is not just the $9000 patient pays but all the physical and mental discomfort the patient goes through and in 2% cases the hospitalization makes it a horrible experience. No wonder, with 80% failure rate not many women go back to this process ever again. And that means giving on the hope of becoming a mother or a parent in man cases.

Medi-Cal’s IVM takes only 2 days, skips the hormonal stimulation and skips all physical and mental side effects related to the hormonal stimulation. And cost of IVM treatment: $5,000; cost of hormones: $300; lab work: $250; miscellaneous costs: $250. So, the lower cost means a freedom to set a lower price too or have a better profit margin. But there are few points – although there is no side effect and IVM takes 2 days instead of 30 days, the success rate is same as IVF that is 20%. And chances are that the woman or the couple could try again if they fail on the first time. So for IVM the source of value is not only in the cost, but on the fact that it does not give any side effect, no chances of hospitalization, no missed work days, and even the first attempt fails the patient can take further attempts, and having a baby or becoming a parent has reward in its own terms.

 

What method(s) mentioned during the lecture seem most appropriate for determining what a person/couple would be willing to pay for a cycle of IVM?

I believe in this specific case we can use “Perceived Value Concept”. The perceived value on IVM would be significantly better than IVF, because of the reason we have discussed. And Medi Cult can increase the perceived value further by creating a brand value, providing great customer service, they have a first mover advantage already so, I believe they can use the “Perceived Value concept” to determine what a person / couple would be willing to pay for a cycle of IVM.

Assuming away issues like insurance coverage, channels (clinics), regulations, etc., approximately what price would you charge for a cycle of IVM?

According to ihr.com IVF treatment costs $12000 – $15000. Given the fact that IVM does not have any side effects IVF has, or it take way too less time, just 2 days instead of 30 days IVF takes and there is no chance of hospitalization, I am sure IVM will have a higher perceived value. And since initially there is no competition, so we can price accordingly. I would charge $19999 for one cycle of IVM and if the person or couple does net get success at first attempt I would be happy to give them a 25% discount. I believe since IVM does not hurt the person, so Medi Cult should provide some help to get happiness of becoming parent.

 

 

References

Winer,R. (n.d.). Customer-Oriented Pricing Exercise. Retrieved from https://my.uopeople.edu/pluginfile.php/248560/mod_workshop/instructauthors/BUS5112%20WA5%20Medi%20Cult%20Case%20Study.pdf

 

Retrieved on 3/6/2018. IVF Costs – In Vitro Fertilization Costs. Retrieved from https://www.ihr.com/infertility/ivf/ivf-in-vitro-fertilization-cost.html

 

Winer, R., & Dhar, R.(2011). Marketing management (4th ed.). Boston; Prentice Hall.

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