Pricing Strategies | The Entrepreneur’s Doctor Tribe Talks | Dr Ismail Sayeed
I always struggle with pricing as a public health doctor, passionate about healthcare that is free at the point of care and based on need, rather than ability to pay. Having said that, irrespective of how the health system is funded, whether private, insurance, or through taxation, money flows.
So as a startup, consultant, or agency, how much should you really be charging for your products and services? Is it simply a case of considering your expenses, or how much profit you’d like? Indeed, as Christophe Jauquet highlights in his keynote talk at the Startup Therapy Summit, can you increase the value by offering experiences and transformations?
Remember, your pricing strategy isn’t just about psychology or neuromarketing, but your solution must be effective too and achieve the results promised.
This is actually a topic I’ve been teaching this week at ThePower Business School, and one where we all grapple with.
My guest today is Dr Ismail Sayeed, physician entrepreneur and medical director of The VIOS Clinic. Dr Sayeed helps medical specialists create and promote their own virtual clinic, in their global concierge telemedicine platform.
Every Monday, our Tribe of international Health Entrepreneurs join a live call, to learn a new topic each week. Immediately after the talk, we stop recording and if you’re here on Zoom, you’ll get to ask your questions and discuss the topic with the speaker and fellow changemakers.
So, handing over to Dr Sayeed:
How much is your solution really worth to your customers?
I want to talk about pricing your products or services. We all talk about the amazing journey towards its innovation, how many lives we will impact and the tie we will wear when we ring the bell on Wall st. — but before all that you have to understand Rule №1 of the free market, how much is your ideal customer willing to invest in you, and which customer are you really trying to attract.
My name is Dr. Ismail Sayeed. I am the Medical Director of The VIOS Clinic — We are the pioneers of Global Concierge Telemedicine.
I think I was always an entrepreneur of sorts. I was obsessed with creating solutions and the art of selling — or as is widely known as closing.
Through various unfortunate events, challenges and opportunities in my medical career, I leveraged the era of mass digital communication and the fertile opportunities in digital health, especially how people put a value or price on specialized healthcare services.
Along this path, I understood the power that pricing plays in positioning your solution — right in the decision making mind space of your customer. And healthcare is no different than any other commodity.
I experimented with different price points and I saw a trend in the character, calibre and even the motivations of those who started to become less price-sensitive, even during this pandemic.
So now I keep asking aspiring healthcare entrepreneurs, who is your customer and what price will attract them to you?
Pricing goes beyond basic accounting and financial modelling. We know of cost plus pricing where you put a number that represents how much money it took to source the raw materials, advertising, manufacturing and maybe legal fees — but that is a rigid way of becoming sustainable, never mind competing with other players in your market.
I propose 3 specific concepts that can start the narrative on pricing for progress and profitability. Mind you there’s a lot involved here and I don’t think we have time for an entire health economics lesson, nor am I qualified to speak about it — but I can discuss these points as a practical and frugal entrepreneur.
I believe in specialized professional niches, like digital health, you have to consider value-based pricing to properly position your solution away from the competitors — like a blue ocean strategy. Something to stand out and make your prospect think why is it priced that way? Is the company crazy or do they actually have something better and more valuable to me?
You can’t be planning for progress, if you are stuck at the same price and are obsessed with increasing your customer base. That just increases your burn rate, the costs of acquiring new customers increase exponentially. What you need to do is to figure out how can I provide even better quality and value and justify it with a different pricing tier — sure many will leave but think of it this way, they were never YOUR customers, they were with you because of a discount or promo code. Customers who are still with you are now value centred and loyal to your brand.
You need to fund your own R&D. You need the resources to fund your next iteration — businesses fail because they couldn’t adapt to new market changes — as we have seen with this ‘Black Swan Event’ of 2020. You can’t waste time and money on satisfying lower tiered customers — who are just one step away from moving elsewhere. By pricing well (not just pricing high) you can plan ahead on reinvesting your projected income towards improving your solution. And it decreases your tax obligations since you’re reinvesting income back into your company. The IRS and your future shareholders will agree with me on this.
So, let me know in the comments: How much is your solution really worth to your customers?
More from Dr Sayeed:
Watch the Tribe Talk:
DISCLAIMER: The content is provided for information only and is not intended as a substitute for medical or any other professional advice. The content is not necessarily representative of any organisations affiliated with Dr Behrooz Behbod. The views or opinions expressed by guests are not necessarily shared or endorsed by Dr Behrooz Behbod.