Business for Health Business Skills for Private Medical Practices

1. Business for Health Business Skills for Private Medical Practices Module 21: Price Your Products and Services

2. A Quick Start Welcome! While you are waiting for the class to begin, please take the Pre-Test and make sure your name is on it before you hand it to the facilitator. Thank you!. Business Skills for Private Medical Practices

3. Agenda Welcome Pricing Goals Pricing Strategies Pricing Options Break-Even Analysis The Value of Price Adjustments Summary and Evaluation Close Business Skills for Private Medical Practices

4. Learning Objectives During this session, you will: • discuss your current price-setting practices; • identify your pricing objectives; • explain different price-setting strategies; • list the number of different ways to price a product or service; Business Skills for Private Medical Practices

5. Learning Objectives • conduct a break-even analysis; • practice setting prices; • define key pricing terms; • analyze how varying prices can benefit a health practice; • discuss the next step; and • state your key take-away from this session. Business Skills for Private Medical Practices

6. Introduction You will have 1 minute to introduce yourself: 1. Your name 2. Your position 3. Your business 4. How long you have been in business Business Skills for Private Medical Practices

7. Pricing Goals Business Skills for Private Medical Practices

8. Your Current Pricing Practices 1. How do you decide how to price your products or services? 2. How do you determine if you are charging too much or too little? 3. Do you ever change your prices? If so, how often and why? 4. How well is your pricing strategy working for you? Business Skills for Private Medical Practices

9. Your Pricing Objectives • Cover costs • Profit for business • Profit for you • Increase revenue • More market share • Serve community • Business survival • Provide for family Business Skills for Private Medical Practices

10. Pricing Strategies Business Skills for Private Medical Practices

11. Price-Setting Strategies • Market or Competitive Pricing • Regulated Pricing • Cost-Plus Pricing • Discount and Promotional Pricing • Differentiated Pricing • Bundled Pricing • Volume Pricing Business Skills for Private Medical Practices

12. Recognizing Pricing Strategies Scenario 1: ? Business Skills for Private Medical Practices

13. Recognizing Pricing Strategies Scenario 1: Bundled Pricing Business Skills for Private Medical Practices

14. Recognizing Pricing Strategies Scenario 2: ? Business Skills for Private Medical Practices

15. Recognizing Pricing Strategies Scenario 2: Discount and Promotional Pricing Business Skills for Private Medical Practices

16. Recognizing Pricing Strategies Scenario 3: ? Business Skills for Private Medical Practices

17. Recognizing Pricing Strategies Scenario 3: Regulated Pricing Business Skills for Private Medical Practices

18. Recognizing Pricing Strategies Scenario 4: ? Business Skills for Private Medical Practices

19. Recognizing Pricing Strategies Scenario 4: Volume Pricing Business Skills for Private Medical Practices

20. Recognizing Pricing Strategies Scenario 5: ? Business Skills for Private Medical Practices

21. Recognizing Pricing Strategies Scenario 5: Market or Competitive Pricing Business Skills for Private Medical Practices

22. Recognizing Pricing Strategies Scenario 6: ? Business Skills for Private Medical Practices

23. Recognizing Pricing Strategies Scenario 6: Cost Plus Pricing Business Skills for Private Medical Practices

24. Recognizing Pricing Strategies Scenario 7: ? Business Skills for Private Medical Practices

25. Recognizing Pricing Strategies Scenario 7: Negotiated Pricing Business Skills for Private Medical Practices

26. Recognizing Pricing Strategies Scenario 8: ? Business Skills for Private Medical Practices

27. Recognizing Pricing Strategies Scenario 8: Differentiated Pricing Business Skills for Private Medical Practices

28. Pricing Options Business Skills for Private Medical Practices

29. Innovative Pricing Options This is a competitive brainstorming activity. • Select a product or a service. • List as many ways as possible to price it. • The group with the most innovative or greatest number of pricing options for each category will win a prize. Business Skills for Private Medical Practices

30. Break-Even Analysis Business Skills for Private Medical Practices

31. Break-Even Analysis and Pricing • The purpose of break-even analysis is to determine the minimum number of sales that is required in order to avoid a loss at a designated sales price. • In order to calculate your sales price, you need to know your fixed and variable costs. Business Skills for Private Medical Practices

32. Break-Even Analysis and Pricing Terms • Variable costs: costs that change in proportion to the volume of your practice. • Minimum affordable unit price: just covers your variable costs- only for a short period of time. Business Skills for Private Medical Practices

33. Break-Even Analysis and Pricing Terms • Fixed costs: costs that are not dependent on the volume of goods or services sold by the practice. • Break-even price: in order to break-even, you need to cover all of your costs, both fixed and variable. You make a profit when your income exceeds your costs at a break-even point. Business Skills for Private Medical Practices

34. Break-Even Analysis and Pricing Terms • Minimum profit per unit: What you want to make after fixed and variable costs are paid. • Unit price floor: the minimum price you will charge so that you can make that minimum profit. You set this price based on your profit goal ( 10%, 15% or higher). Business Skills for Private Medical Practices

35. Break-Even Analysis and Pricing Terms • Additional unit profit: you get this if you are able to set a higher price. • Unit price ceiling: the highest price you can charge and still be competitive in your market. Business Skills for Private Medical Practices

36. Unit Price Ranges Business Skills for Private Medical Practices

37. Variable Cost Business Skills for Private Medical Practices

38. Minimum Affordable Cost Minimum Affordable Cost = Variable Cost Business Skills for Private Medical Practices

39. Fixed Cost Business Skills for Private Medical Practices

40. Break-Even Price Break-Even Price = Variable + Fixed Costs Business Skills for Private Medical Practices

41. Minimum Profit Business Skills for Private Medical Practices

42. Price Floor Price Floor = Fixed and Variable Cost + Profit Business Skills for Private Medical Practices

43. Additional Profit Business Skills for Private Medical Practices

44. Price Ceiling Price Ceiling= Fixed and Variable Costs + Minimum Profit + Additional Profit Business Skills for Private Medical Practices

45. Unit Price Ranges Business Skills for Private Medical Practices

46. Calculating Prices: Scenario 1 1. What is your minimal affordable price? Business Skills for Private Medical Practices

47. Calculating Prices: Scenario 1 1. What is your minimal affordable price? 2 covers variable cost Business Skills for Private Medical Practices

48. Calculating Prices: Scenario 1 2. What is your break-evenprice? Business Skills for Private Medical Practices

49. Calculating Prices: Scenario 1 2. What is your break-even price? 3 = 1 (fixed cost) + 2 (variable cost) Business Skills for Private Medical Practices

50. Calculating Prices: Scenario 1 3. What is your price floor? Business Skills for Private Medical Practices