In March 2001, the President of the Sy.Med Development, Inc. (Sy.Med), a small healthcare software company, was concerned about his company sales in the year-to-date. Nine units were projected, but only three have been sold. As a result Sy.Med was 66 percent below the forecast unit president, lost 210 percent of its net income forecast and had $ 40,000. The President asked whether a change in the basic price of the software revenue was necessary to increase. The case represents th … Read more »

In March 2001, the President of the Sy.Med Development, Inc. (Sy.Med), a small healthcare software company, was concerned about his company sales in the year-to-date. Nine units were projected, but only three have been sold. As a result Sy.Med was 66 percent below the forecast unit president, lost 210 percent of its net income forecast and had $ 40,000. The President asked whether a change in the basic price of the software revenue was necessary to increase. The case introduces the concept of “value pricing”, that is, have received the pricing on the basis of the value of customers, not the pricing based on the cost of providing the product or service. The concept of value pricing in Sy.Med requires the simultaneous consideration of customer segments and sales force allocation in a high-tech environment. With careful calculation, students can determine the value for a specific customer to use the software OneApp. Some sensitivity analysis is needed because not all sizes of practice equivalent, nor do they face the same labor costs. Although the pricing decision is the focus of the case strategy (eg in relation to customer selection, strategic focus) and sales force issues are inextricably linked to this decision. After the discussion is completed in class, students should understand that the pricing decisions do not be taken in isolation, to consider the strategy and structure of the market. The case works well in the core MBA marketing course to as well the concept of value pricing, and concentrated in a course on pricing to introduce to emphasize the relationships between organizational issues, the competitive market and the pricing decision. The case can also be used to help in an orientation program or as an introductory case, the training of students in the art of making a quantitative analysis of the case.
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Randle D. Raggio
Source: Ivey Publishing
20 pages.
Release Date: 26 May 2009. Prod #: 909A10-PDF-ENG
Sy.Med Development, Inc. HBR case solution