Establishing Prices for Integrative Health Products and Services

By Glenn Sabin

Arrow on 'Pricing' Target
As an integrative functional medicine business owner or executive, you may serve a local, national, international clientele, or a group of constituents comprised of varying demographics and psychographics. So how do you best decide fair market value for what you offer?

Determining Pricing for Products and Services

If you are a physician who has opted out of commercial insurance and Medicare, you may charge for each patient encounter; or offer a membership option. Perhaps you feature a hybrid model: accepting third-party reimbursement plus charging an annual membership fee.

As a non-clinician integrative health professional, your offerings might focus on educational programs and services exclusively online. It could be you offer products and services as varied as nutraceuticals, novel lab testing, non-invasive medical devices, organization memberships/ conferences, or mobile health apps.

The organization you serve may be structured as for-profit or non-profit. The sales channels you utilize might be exclusively direct-to-consumer, direct-to retail, or direct-to-practitioner—or a hybrid of some sort.

So many scenarios… how do you best set your prices and fees?

Should pricing be based on the primary demographics and psychographics of your target buyer personas (aka avatars)?

Have you done a deeper level of market research?

Are you tracking the current pricing structures within your competitive set—your biggest competitors—focusing on the products and/or services most closely matched to yours?

What about the core factors of quality, brand differentiation, and actual COG (cost of goods or services)?

If you have covered the above items, you are on the right track to determine the most appropriate pricing for your company offerings.

However, you never ever want to compete on price alone, because…

Competing on Price is a Race to the Bottom

The model of ‘rock-bottom prices’ works best for commodities—like the gas station down the street—not for integrative health clinics, companies, and organizations.

[Related Content: We’re All in Sales: Advancing Integrative Health]

Expanding on the gas station example: have you ever noticed that, often, when two gas stations with the same brand sit next to or across the road from each other, they tend to keep their prices exactly the same? This helps create a pricing ‘floor’, a governor of sorts.

If it weren’t for the pricing ‘floor’ these establishments would cannibalize each other. The businesses would not benefit—though customers would until the service stations inevitably drove themselves out of business. Competing on price is a race to the bottom and, over time, you most definitely will reach that destination: bottom. Bankrupt.  

[Related Content: Is Functional Medicine Becoming a Commodity?]

Base Pricing on Engagement, Value, and Trust

Customers who base their healthcare decision-making solely on price are likely not your ideal target customers. However, since most consumers are price conscious, it is your job to overcome your prospects’ objections to qualify the cost of their investment, and then make the sale.

When prospective customers push back on costs, you are already deep into the sales process. Discussion on pricing means folks want to do business with you, but they are asking you to reinforce your value proposition.

What they want to know is ‘what’s in it for me?’

Are you delivering a quality product and/or service experience with a unique brand positioning, making it head and shoulders above all others?

Any objection has to be overcome through education, engagement, proving value, and gaining trust.

It is incumbent upon you to provide a quality experience—prior to the sale or the ‘ask’ for the sale—that exudes the attributes of your unique brand, be that a product, program, or you as a personally branded physician.

[Related Content:Your Integrative Health Brand and Platform: Invest or Fail]

[Related Content: ‘Educating’ is Most Effective Marketing Strategy for Integrative Health Providers]

Charging What Your Products and Services Are Worth

If you are marketing and messaging through heavy education, and being more helpful than your competitors, you can earn trust and gain loyalty, thereby charging what your products or programs are truly worth.

What is your unique selling proposition? What differentiates your brand from all others? Are these unique attributes clearly and consistently communicated from the sole perspective of how it benefits the potential buyer? If so, you are better positioned to command a premium price. But you need to nail the problem/solution engagement process, and connect emotionally.

Examples of Brand Differentiation

Xymogen, the practitioner-only brand, manufactures its products in a TGA (Australian certification used for pharma and supplement companies in that country) certified facility, one of only two in the U.S. that I am aware of. (In full disclosure, I have consulted to Xymogen in the past.)

The company also pioneered their ePedigree tracking system that essentially stamps a unique serialized number on each bottle of product. This provides 100% control of its supply chain, including temperature control and preventing counterfeiting of it products. This also allows Xymogen to keep its products off the internet, and to be sold only by its contracted clinician partners, and through its proprietary portal.

These are powerful brand differentiators. And Xymogen commands fair pricing commensurate with their innovation, and how they have consistently invested in their brand.

Cell Science Systems (CSS), owner of Alcat, is asserting dominance of its preeminent food sensitivity and chemicals test through clinical trials supporting its efficacy. A new study was just published by investigators from Yale Medical School. The investment in scientific inquiry, and the gravitas of the association with an esteemed academic institution, helps Alcat differentiate and extend its brand capital.

Competitors of the Alcat test, primarily IgG antibody testing offered by myriad labs, has not been scientifically proven as effective. It is generally believed that Alcat is more effective than IgG, because Alcat measures the total amount of inflammation (caused by a food) in whole blood, while IgG measures antibodies, but not inflammatory load.

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IgG typically costs less than Alcat, though prices can vary widely from lab to lab. In the case of Alcat versus IgG, there is no reason for Alcat to compete on price. Cell Science Systems controls the end-to-end process of marketing Alcat and utilizing its own laboratory to process all specimens. CSS has no licensed lab partners in the United States. Labs offering IgG are not providing a proprietary ‘branded’ product, therefore there is little to no motivation to invest in the necessary clinical research to support its relevance.

The level of brand differentiation and investment that CSS has created allows the company to command a premium price for its Alcat test.

For this piece, I am intentionally not calling out specific integrative or functional medicine practices, centers, or academic clinical programs doing a brilliant job commanding fair market value (or a premium) for their services and programs.

Keeping local demographics in mind, direct-pay clinical services providers who’ve properly invested in their brand platforms, and consistently engage their communities with relevant, trusted educational information as the cornerstone of their marketing strategy, are doing just fine. While most well-trained and credentialed providers are able to produce consistent healing outcomes, it is the aforementioned that create the environment through which they set (and earn) their pricing structures.

It’s paramount for a successful pricing structure that these questions be fully comprehended and then answered.

  1. What criteria does your organization use to set its pricing?
  2. Does your organization differentiate its brand from all others in your market?
  3. How is your organization differentiating its brand from all others in your market?
  4. How does your brand, and its current positioning, impact your ability to set pricing commensurate with the quality and value of your services and products?

If you have difficulty answering these questions or pinpointing where you stand, perhaps you’d like FON to run through an exploration with you.

Contact FON for a 30 minute complimentary phone or Skype consult to discuss your specific goals, opportunities, and challenges.

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Glenn Sabin Author: Glenn Sabin

FON’s founder, Glenn Sabin, is a nationally recognized thought leader with a reputation for successfully positioning integrative health organizations for sustainable growth. Combining media, marketing and business development expertise with an extensive professional and personal integrative health and medicine narrative, Glenn is deeply passionate about advancing the field as the new standard of care—accessible to all.
Read Glenn’s story.

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