Value-based pricing

Christopher M, Gattoma J (2005) Supply chain cost management and value-based pricing. Industrial Marketing Management 34 (2) 115-121 Clark E, Lesourd J, Thieblemont R (2001) International commodity trading physical and derivative markets, John Wiley Sons, Chichester Commodity Research Bureau (2005) The CRB Commodity Yearbook 2005, John Wiley Sons, Chichester... 

Sculpher M (2013) Pricing and reimbursement schemes is value-base pricing a feasible policy in latin-american countries ISPOR 4th Latin American Conference, http //www.ispor.org/conferences/... 

Our focus is on a particular innovative procurement mechanism value-based pricing of medicines. While this is to date a mechanism largely experimented with in high-income countries, we think it is important because it shifts the attention of procurement policy from a market (often monopoly) price for an already developed drug to an assessment of how a drug will actually work in particular country contexts and for identified needs. Its attractiveness is in indicating ways forward in adapting procurement to a focus on population health benefit and patient needs. 

Camps-Walsh, G., Aivas, I. Barratt, H. (2009) Improving UK Patient Outcomes How Can Value-Based Pricing Improve Access and Adoption of New Treatments Available from http //www.2020health.org/dms/2020health/downloads/ reports/2020vpcdoc-sep09.pdf [accessed 1 May 2015]. 

Deloitte (2012) Value-Based Pricing for Pharmaceuticals Implications of the Shift from Volume to Value. Available from http //deloitte.wsj.com/cfo/files/2012/09/ ValueBasedPricingPharma.pdf [accessed 1 May 2015]. 

Persson, U. (2012) Value Based Pricing in Sweden Lessons for Design . Seminar Briefing 12. Ofhce of Health Economics, London. Available from https //www. ohe.org/news/value-based-pricing-sweden-lessons-design [accessed 1 May 2015]. 

Persson, U., Willis, M. Odegaard, K. (2010) A case study of ex ante, value-based price and reimbursement decision-making TLV and rimonabant in Sweden, European Journal of Health Economics, 11 (2), 195-203. 

Farr, J. V. (2001). Commodities and Value Based Pricing of Engineering Services, draft paper (For current version of the paper and other matters, contact the author at ifarr stevens-tech.edu.)... 

High value-to-price ratio based on critical selection and evalutation of the vast literature on the subject... 

Currently, physicians and patients determine the demand for pharmaceuticals and employers and insurers assume the risk and cost. As the price of new health care technologies escalates, payers will design and implement strategies to share risk and cost. Defined employer contributions, increased patient cost sharing, and benefit exclusions will be used to help control utilization and cost. In this environment, value-based assessments will be crucial to the adoption of any technological innovation. It is reasonable to expect public and private coverage for new therapies if evidence is provided regarding the costs and consequences of treatment. However, social and ethical dilemmas will certainly arise as therapies whose costs exceed their benefits are debated in the public arena. 

While there are large unknowns about the cost of high temperature electrolysis systems, an economic assessment can be made of the peak electricity market underlying the potential system economics. The distinguishing characteristic of this system is that the electricity is sold to meet the needs of three premium markets (US DOE, 2007b), in which the value and price of electricity are far above the price of base-load electricity. These three markets (Table 1) determine the technical requirements and economic viability of the concept. 

In many cases it is informative to have Second Law based prices associated with a change in thermodynamic value streams corresponding to 0 or X. These Second Law based prices may be obtained by using the chain rule... 

Using this correlation we can impute crude oil price corresponding to a particular construction cost index. Using the 2007 value for the construction cost implies an equivalent oil price of 70 per barrel. This is used as the base price for oil and derivatives in the analysis. 

The value-based approach presumes that quality can be defined in terms of costs and prices. Garvin (1984b, p. 28) uses the following example to clarify this perspective [A] 500 running shoe, no matter how well constructed, could not be a quality product, for it would find few buyers. Reeves and Bednar (1994) emphasize that this definition of quality forces firms to concentrate on internal efficiency ( internal conformance to specifications ) and external effectiveness ( the extent to which external customer expectations are met ). However, this approach mixes two distinct, though related, concepts quality and value (Reeves and Bednar 1994). Because of its hybrid nature, this concept lacks definitional clarity and might result in incompatible designs when implemented in practice. 

The value-based approach relates the performance of a product or service to its price or the cost associated with its production. According to this notion, those products that offer a certain performance at a reasonable price are products with high quality. 

Value based Feigenbaum 1983 Quality means best of certain conditions (a) the actual use, and (b) the seUing price. ... 

Quality—Conformance to requirements or fitness for use. Quality can be defined through five principal approaches (1) Transcendent quality is an ideal, a condition of excellence. (2) Product-based quality is based on a product attribute. (3) User-based quality is fitness for use. (4) Manufacturing-based quality is conformance to requirements. (5) Value-based quality is the degree of excellence at an acceptable price. Also, quality has two major components (1) quality of conformance—quality is defined by the absence of defects, and (2) quality of design—quality is measured by the degree of customer satisfaction with a product s characteristics and features. 

Value-based quality is the degree of excellence at an acceptable price. Also, quality has two major components (1) quality of conformance—quality is defined by the absence of defects, and (2) quality of design—quality is measured by the degree of customer satisfaction with a product s characteristics and features. 

Performance-based pricing Basing prices on value to the customer, not necessarily what the product costs. The supply chain can influence value to the customer. Applies specifically to innovative products as opposed to functional ones where prices are cost driven in competitive markets. 

Realizing the shortcomings in the enthalpy-based method, Kenney (1984) proposed to value steam based on the potential work that the steam possesses in comparison with enthalpy. Kenney pointed out that the enthalpy-based pricing method is based on the first law of thermodynamics (energy conservation), while the work-based pricing is based on the second law of thermodynamics (entropy). In thermodynamics, potential work is also termed as availability (a) implying the amount of potential work available. 

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