How was Philips Healthcare able to create a margin impact of €1mio annually?

Tobias Happel, Global Pricing Manager with Philips Healthcare will discuss his CPM (Certified Pricing Management) business case during the 5th EPP Life Sciences Pricing Forum on September 22nd 2015 in Montreux, Switzerland.                     

Tobias Happel – Global Pricing Manager – Philips Healthcare
Here is a preview on some answers.
Q Last year you got your CPM certification. How did this training help the company?  Can you share some information on the outcome of the value based pricing project as with regards to the ROI/revenue gained?
Through our business case we created a margin impact of 1 M Euro annually (!). Now we apply the same principles for other value pricing projects which we cannot quantify so far. More information will be shared in my business case on the 5th EPP Life Sciences Pricing Forum, organised in Montreux on September 22nd-23rd, 2015.
Q What are the success criteria of this successful value calculator that is actually and actively being used by sales?
  1. Simple – It should be easy for the sales team to use and for the customers to follow. The model has to be so simple that if your sales rep hands it off to a client, they can sit with their internal senior team and walk through the model.
  2. Credible – It should use the customer’s own data, and where data isn’t available, suggest value based on similar client scenarios. Remember the earlier example I gave of the sales rep, data credibility is very important. It makes your sales team trust worthy. Instead of using a national average, it is always better to use the customer’s own data.
  3. Flexible  – The model should allow for a reasonable amount of tweaking, based on information relative to customer needs. If the client operates on a different cost base than the rest of its peers, the model should be flexible enough to incorporate that information.
  4. Involve partners  –  …such as dealers as they are early users which can be used for validation
  5. Validate with customers  –  In order to ensure that customers do accept our unique features and are willing to pay a premium for it. Thus a customer survey about our value calculator is extremely helpful.
Q You have been working with Philips Healthcare since 15 years. What is so different in the Life Sciences industry now – compared to when you started working for Philips?
  • Competition has changed quite a bit. We are facing much more price sensitive vendors, mainly from Asia.
  • Much more focus on offering complete solutions which also requires some project management skills instead of box business
  • Customer buying behavior has changed quite a bit – much stronger pressure on their budget. Approver levels also changed, e.g. the CIO and CFO is much more involved instead of the head nurse.
Q How has the function of ‘pricing manager’ evolved during the years?
When I started pricing was very operational à list price management. By now we are much more focusing on Business and country reviews, recently focusing on value based pricing but also solution management. So there is a much stronger emphasis and focus to optimize profitability. We also started a project of looking at different payment solutions such as “pay per use”. So quite a change also requiring different skill sets on pricing managers in our days.
Q What should be the outcome of this forum for you personally?
Of course get some inspiration for my line of work so that I can implement some improvements there. But overall I hope that through our contributions, exchange of ideas and networking that we can grow the pricing community and help them to accelerate and ascend in our organizational structure in our companies.

Interested to join us at the 5th EPP Life Sciences Pricing Forum to discover all about the Philips Healthcare business case and much more? Register now!

We also asked mr. Happel if he would recommend this training to other people.
This was his answer:
Of course. 😉
Want to know more about the CPM training? Click here.