“If you do pricing right, the margin takes care of itself.” –enterprise operations director, medical technology manufacturer
The prescription for healthy profits in the medtech industry is intelligent pricing. With PROS AI-powered pricing and guidance software, a manufacturing leader is able to drive sales growth and combat downward margin pressures to thrive in an increasingly complex industry landscape.
Cutting Through Pricing Complexity
An innovative medical technology manufacturer is committed to helping healthcare professionals around the world diagnose and treat patients with precision, certainty, and confidence. It is with the same drive that the company wanted to navigate an increasingly complex and challenging industry landscape with smart pricing tools and technologies.
Gone are the days of doctors and hospitals automatically upgrading to cutting-edge medical technologies. In this new era of regulation, negotiation, and price transparency, the industry focus is on technology’s value and impact on patient outcomes. The growing power of buying groups and GPOs adds to the complexity, and it often seems customers have more insight into pricing than sales reps do. A single misstep in pricing—charging too much or too little—could lead to millions of dollars in price exposure risk.
To maintain its competitive edge and fight downward pricing pressures, the manufacturer wanted to modernize its pricing processes to better understand and capture the value of every sale. To do this, the company needed more than just great products; it needed clear visibility into customer profitability as well as insight into pricing differences between individual customers.
Delivering a Smarter Pricing Strategy
PROS provides the powerful pricing solution needed to achieve defensible winning prices for every customer.
Automation. With PROS dynamic pricing management software to automate repetitive, manual price reporting tasks, pricing teams make fewer errors and gain the freedom to focus on more strategic efforts.
Visibility. Pricing information is now easily accessible throughout the organization—from marketing to finance to sales—to provide quick answers to questions like: “What are comparable prices for this segment? What discounts have we historically allowed at this IDN or GPO? Who are our best customers? And where is our growth coming from?” To better understand the negotiation levers that are working for the business and which have a lesser margin impact, the company’s pricing team relies on price waterfall analysis.
Prescriptive guidance. Unlike most traditional pricing tools that are focused only on business analytics, PROS delivers real-time prescriptive pricing guidance, helping sales teams understand where customers see value. These tailored pricing recommendations are delivered to sales reps directly into their third-party Salesforce CPQ solution. Using the standard open APIs of PROS pricing solutions, this seamless integration with Salesforce CPQ ensures that the right, fair price is easily available to sales reps via real-time web service calls whenever they are constructing quotes. By leveraging real-time price responses and incorporating customer willingness-to-pay into its sales capabilities, the company has been able to increase win-rates, improve the customer experience, and foster long-term satisfaction.
Improved price integrity. By proactively considering the negotiation levers customers may be interested in, sales reps are able to have constructive conversations about their “give/get” exchanges with clients without sacrificing profitability. Whenever a customer asks for a larger discount, they discuss “How does the customer earn a better price?” This disciplined approach has helped the company narrow price variance to within 5 percent for its flagship product.
Continuous improvement. PROS pricing solutions also provide visibility into leading indicators to pinpoint drivers of decline and growth, enabling the manufacturer to continually improve its pricing performance. With PROS Insights capabilities, it can continuously review the factors behind why deals are won and find opportunities for improvement. During customer conversations, strong price integrity has helped shift the focus from discount negotiations to value discussions. While most salespeople attribute the cause of their lost deals to pricing, salespeople at this medtech manufacturer report that only 18 percent of their deals are lost as a result of price. Customers and the larger market have noticed that this company operates differently; maintaining price integrity has added value to the brand.
All-in-all, the PROS solution delivers on the company’s goals to:
- Maintain price integrity and improve margins through a partnership with its sales teams
- Use peer-based comparisons to identify any price points below market levels
- Establish specific improvement goals based on target pricing guidance
- Empower teams to find best-fit solutions to achieve and maintain market-level pricing
Realizing Transformative Results
PROS provides this medtech leader with the analytical insights and data science-driven pricing to move from using a reactive, manual process to using a mature, disciplined pricing methodology. Now, the business can align pricing with sales needs to support defensible pricing, which has contributed to significant results, including:
- Exceeding fiscal goals two years in a row
- Recovering 300 basis points from excessive discounting
- Increasing market share while maintaining pricing