Your company have just developed a new vaccine for COVID-19 and has passed the final testing round. How would you price it?
Assume your company is based in US. All other variables are the same as real life.
It seems there can be many market sizing + pricing strategy elements weaved in this case, and I am thinking of a structured way to approach it - especially given our objective is probably not maximising profit (ethnical consideration), and we might be able to sell to government which has a budget constraint as well.
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Thanks, that's very insightful. I have a follow up question: How do we structure the tree? I was thinking 1) Define objective 2) Explore price under value/cost/competitor based pricing 3) Choose one pricing strategy given our objective. But it seems after we defined our objective (for example, not revenue maximisation but to establish a ethical brand image), then it seems we cannot price by value but better to go with cost. In this case should I still go through the value creation discussions? Another problem I have is how to price based on cost - normally in the COVID case, my approach is - aim to recover R&D in 2 years, assume a $xxx mn of Fixed cost and $xx Variable cost, then assume a coverage of 10% population each year (given capacity), with COVID disappearing in around 5 years (when the vaccine will no longer make money). Do you think it is reasonable? Kind of feel it's too simplistic...