Companies, in most cases, set their prices based on the unit cost to their products. Pricing is one of the most challenging tasks in a business setting. According to El Nemar & Mallat, (2017), placing the prices too low will mean that the products would move very fast, and there will be minimal or no profits at all for the business. Setting the prices too high would mean a slow movement of inventory at the face of realizing colossal profit margins for each unit of product or service. The full cost pricing strategy basically for providing maximum profits. The prices are set according to the individual unit cost of the healthcare products and services. The prices are set far beyond the single unit cost by placing the business overhead entirely into the strategy. The final price of the product is inclusive of all the expenses incurred by the running of the business. The costs include water and electricity bills, labor costs, tax, among others.
The margin-cost pricing strategy as it is basically designed to move inventory fast. According to Ghiasi, et al., (2019), healthcare price is set at the margin or just ahead of the margin. The result is that the prices are meager and therefore, patients would demand more of the products or services. The pricing is typically used by companies that are introducing new products into the market to make them accessible or the companies that want to get rid of the old inventories.
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As the chief financial officer is the largest healthcare in the city; I would use a full-cost pricing strategy as it is the best for the success of the business. Due to its size, the fixed costs incurred by the health care organization are huge in terms of electricity and water bills, tax, and labor costs, among others. To comfortably pay for these costs and still accrue reasonable profits, the expenses need to be transferred to the customers.
Reference
El Nemar, S., & Mallat, A. (2017, September). Pricing strategies in the Lebanese pharmaceutical industry. In 10th Annual Conference of the EuroMed Academy of Business .
Ghiasi, A., Hearld, L., Zengul, F., Rsulnia, M., Hood, A., & Puro, N. (2019). The Moderating Effect of Environmental Instability on the Hospital Strategy-Financial Performance Relationship. Journal of Health Care Finance .
