how to establish a pricing structure?
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How to establish a pricing structure?. Financing eye care institutions in poor countries S asipriya K M L ions Aravind Institute of Community Ophthalmology , Madurai, India. Pricing Structure: Underlying principle. Organisation’s Mission Business model. - PowerPoint PPT PresentationTRANSCRIPT
HOW TO ESTABLISH A PRICING STRUCTURE?Financing eye care institutions in poor countries
Sasipriya K M
Lions Aravind Institute of Community Ophthalmology, Madurai, India
Pricing Structure: Underlying principle
•Organisation’s Mission
•Business model
Pricing Structure: Considerations
•Understanding the community
•Service volumes
•Encouraging greater footfalls in the hospital
Understanding the income levels
The bird of gold: The rise of India’s consumer market – May 2007, McKinsey Global Institute, p.12
Above cost – market rates
Pricing that would encourage patients to pay
Willingness to pay:• Sample size: 1271 households (one person represented)• 96% of the patients were willing to undergo cataract
surgery• 57% were willing to pay irrespective of availability of free surgeries • 31% were willing to pay if free surgeries were not available
• Of these, 27.8% were willing to pay at Rs. 500 – 1000/-• 45% were willing to pay between Rs. 300 – 450/-
Unpublished report: Household Willingness to Pay for cataract surgery in Rural India - Muralikrishnan Radhakrishnan, Rengaraj Venkatesh,
Vijayakumar Valaguru & Kevin Frick
Willingness to pay for phaco surgeries: an example from Aravind Theni
Madurai 9,082
Tiruvelveli 9,224
Theni 5,180
Coimbatore 9,717
Pondicherry 11,184
Revenue per Surgery
April May June July August September0%
10%
20%
30%
40%
50%
60%
70%
40%47%
38%34% 35% 38%
59% 62% 61%57% 57%
52%
% of PHACO surgeries 2010
2011
An example from hinterland
Cataract surgeries:
2009 -10 2010 - 11
Paying 3,370 3,623
Subsidised 529 759
Outreach 2,331 2,648
Total 6,230 7,030
Surgical revenue (patient receipts)
23% 35%
Consider 1,000 persons requiring cataract surgeryin a community
On the basis of the economic profile…
Profile Surgeries
Pricing
Very poor(30%) 300 Free
Poor(20%) 200Subsidized
Low Middle(25%)
250 Cost +
Middle(20%) 200 Cost ++
High(5%) 50Cost +++
Total (100%)
1,000
Rate(Rs.)
Revenue
0 0
750 150,000
3,000 750,000
5,0001,000,0
00
10,000 500,000
2,400,000Cost of 1,000 Surgeries (Rs.1,500/surgery): 1,500,000
Surplus: 900,000
Pricing strategy: is beyond hard money!
•Quality of the services •Designing the services taking into account the “other costs” to the patients
•Transparency •Standardisation •Utilisation of the resources
Thank You
Better pricing strategy =
Service volumes + better quality + financial health!