In order to understand the implications of reference pricing, the drivers of demand for colonoscopies has to be understood. Colonoscopies are used to detect cancers and precancerous polyps, and they are a recommended technique for this, being that the physician can examine the colon visually. Other techniques are not as effective. The reality is that polyps and even early stage colon cancer are often asymptomatic, but of course early detection has the best outcomes for patients. For this reason, the most effective early detection technique and for the ability to detect and remove precancerous polyps, the colonoscopy is recommended (ACA, 2015). Other techniques exist, but they are not perfect substitutes for a colonoscopy -- the fecal test is not as effective as a colonoscopy and is therefore not a substitute for one. That said, patients do not always make their decisions based on medical data, but economic analysis assumes that patients are rational.
With a $500 reference price, patients would be oriented to seek out the lowest-cost provider. While the lowest quartile of providers charge less than $536 (the $36 is basically...
Likely, these low-cost colonoscopies are available in areas where factor costs such as labor are low, or where payers demand low-cost medical services. Assuming perfectly even distribution of low cost colonoscopy providers, however, patients are likely to seek out these providers where possible, in order to eliminate out-of-pocket costs.
However, the average price is much higher, and consumers may choose to pay the added cost. Indeed, a rational consumer would pay the added cost, given that colon cancer costs a lot more than a colonoscopy. Most patients at risk for this are older, so are more likely to be at a point in their career where they can afford a few extra hundred dollars for the average-priced colonoscopy. On the whole, the $500 reference price would orient the market (both consumers and providers) to colonoscopies that cost closer to that price. However, while the reference price should help to skew the market towards lower prices, providers that are priced substantially higher than $1,000 are likely catering to a market that can reasonably afford the higher cost for better care, and will not see the expense as anything more than a good investment in future health. Only in the middle of the…
Pricing Method In any market, there is bound to be a strategy that is used to decide on the prices that the commodities or the services that the potential clients will be in need of. Since the goods or the services availed are always targeted at making a profit at the end o the day, pricing is one of the most fundamental focuses that the entrepreneurs have to keenly look at
Pricing Strategy and Channel Distribution Pricing Strategy . Pricing Tactics Legal and Ethical Issues Related to the Pricing Tactics .… Marketing Distribution Channel Analysis Distribution Strategy Fitting Marketing Objectives & #8230 In this case, Atlantic Computers has a plethora of various pricing strategies available to use for its interesting new server. The server has a unique software component which if it is installed with the server as a package then the server becomes extremely more productive
There is injustice done to the ratepayers through higher rates. Some others will benefit by the subsidized energy efficient products such as light bulbs, refrigerators, consultation services, and to cap it is argued that a utility service provider is in no position to fix the benefits as much as the customers and since it depends on many individuals and therefore the energy efficiency and the interest rates and the
Pricing the Kindle Fire The Kindle Fire, priced at $199, is just 39% of the price of it's most well-entrenched and popular competitor the Apple iPad2, which sells for $499. Amazon has pursued a market penetration strategy with this product, looking to create a content consumption platform for the future. Apple argues that the iPad2 is a content creation and consumption platform. The price differential of $300 is steep to pay
Pricing Strategy I email files. PRICING OVERALL COSTS The initial set up and marketing costs in starting the business will be treated as capital costs and thus, they will not be considered in the determination of the product and service price. The cost to be considered in setting price will be: Tire Purchase cost Cost of tire shipment Buildings lease hold cost entailing the office and store rents, Sales and administration personnel costs, Future costs of marketing, advertisement and
Pricing Decisions In today's competitive environment, pricing has emerged as a critical business competency. Executives in consumer, industrial, and service sectors must be prepared to face complex pricing challenges and to leverage pricing in order to capture the greatest market advantage. One of the things in setting prices, the management should look at the elasticity of demand. Elasticity is simply a measure of how items respond to changes in price. The goal