6 Powerful Pricing Strategies Used in Healthcare

As healthcare becomes increasingly consumer-focused, with rising consumerism, transparency, high-deductible health plans, and transitions from volume to value, healthcare providers have a growing need to develop a pricing strategy that improves their market competitiveness.

Best 6 Pricing Strategies Used in Healthcare

Strategy!! What does it mean? And why should I have one? Does it really affect my profit? Is that a lifetime study? Are there many types of strategies? Who can I choose what suits me?

Strategy is an old word used to use in a war that refers to a tactical long-term plan, with time, the term expanded to include business plans.

Any successful corporation must have one, it shows us the best direction, but it needs a lot of experience and more exterminations to settle your own strategy.

And pricing as its one of the most important factors of the success of any corporation, so you must know the best pricing strategy that suitable for your services, segmented customers, economic conditions, and your competitors.

So, let’s begin here with the most common, successful pricing strategies that are applied in the healthcare industry.

1. Market Skimming Strategy

Price skimming strategy target high-income customers who classified as trendsetters, it usually used when you’re launching a new service or have a competitive advantage such as buying a new high-tech C.T machine, you should put your price at point, before gradually lowering your price over time. you are providing a unique and competent service at a high price that achieves the highest profit to the business.

Market Skimming Advantages

  • Higher Return on Investment.
  • It Helps Create and Maintain Your Brand Image.
  • It Segments the Market.
  • Early Adopters Help Test New Products.

Business owners like price skimming, price skimming helps you break even faster. also, it provides some levels of security—granted that your initial price isn’t too extreme—before making your product or service more accessible to the greater market.

2. Penetration Pricing Strategy

This is the opposite of price skimming, it’s a massive volume pricing strategy, instead of starting with high prices, we start here with the level of the minimum price, then we gradually raise them Parallel with volume.

However, there is some risk of little or zero profit in the beginning While this does put you at risk for limited or even zero profit, but it’s a freeway that can encourage a customer to take your services, you’re providing a discounted experience to create customer loyalty.

So, if you start your new healthcare project like a small hospital, laboratory in a local neighborhood surrounded by competitors.

you should put your services price list at the minimum profit level or at your breakeven point, sometimes you accept some planned losses

in this time, you don’t target profit, you attract new market share.

so, in this case, let’s say that your lab has put a price to CBC test, and you know it costs 16 EGP, and the benchmark in your area is between 15 to 25 EGP.

So, you should put your price in the lowest level 15 EGP, then gradually raise it directly with the volume.

Penetration pricing is designed to put the spotlight on your brand. Because of this, your prices will always start lower than what your competitors are charging. Once you’ve successfully achieved market penetration, you can rise to an equivalent price or even higher, depending on how positive your customer feedback is.

3. Competitive Pricing Strategy

In the market, you are not alone, you are in a wrestling arena, surrounded by competitors taking punches and hit them quickly, so you must always be aware of competitors’ movements.

This is competitive pricing, not much different from penetration pricing, but instead of targeting the market, you aim to keep your competitors away from your customers, so you do price your services at a competitive level with your competitors and keep an eye on their reaction so that you can move the price based on their movements, you will keep price-sensitive customers loyal to your brand for reliably helping them stay within budget.

But be careful, this dangerous strategy can’t last forever because you must consider the different production conditions between you and your competitors.

4. Premium Pricing Strategy

If you’re someone who believes that the low prices are just what attracts customers, sorry you are wrong, there are a large segment of customers are attracted to the exclusive, luxury, unique brand you must seek them, demonstrate the advantages that your brand can provide.

This is the preferred strategy for plastic surgeons, elite healthcare, luxury hotel services, medical tourism, high-tech devices.

A premium pricing strategy can help you build the perceived value of your product or service, straight from your initial launch. Your prices may drop slightly over time, but they should still give your buyers a feeling of exclusivity and, in many cases, luxury.

There is a misconception that premium prices are associated with luxury brands and this is also a mistake. Any brand can follow this strategy, for example, Panadol uses a premium price strategy depending on its brand and therefore many customers use it because they believe that it is the best pain reliever although, there are some other pain relievers that may be better.

5. Psychological Pricing Strategy

Always remember “The closer you think you are, the less you’ll actually see”.

Numbers you see can influence you more than you think. Instead of changing consumer perceptions about a product, psychological pricing uniquely aims to change perceptions about what the price even is in the first place. A few common examples of this strategy that are proven to work include:

  • Ending a price with an odd number to make a customer feel like they’re spending much less ($5.99 instead of $6, or 97 cents instead of $1). This is often known as charm pricing.
  • Using larger font sizes for dollar amounts and smaller font sizes for cents. Paired with charm pricing, you can further emphasize a customer’s feelings that they’re paying significantly less.
  • Placing an original price next to a sale price to show customers how much they’re saving. This is sometimes known as anchor pricing.

A psychological pricing strategy is best used for brands that are targeting price-sensitive customers, as it provides a perceived deal that customers with an affinity for luxury may not want.

6. Value Pricing Strategy

After talking about various pricing strategies, we come here to a very important strategy because it considers all the economic, productive, and psychological factors of the product and its customers.

Value, value is everything and anything, your product, the market, motives, psychological and economic factors.

In order to set value-based prices, you must have a deep understanding of your target customer’s needs, pain points, and motivations, as well as your brand’s own reputation. You’ll also need to consider how the state of the market affects how people perceive value. For example, the value of a non-necessity like Gym subscription may decrease during a recession.

While we are highlighting value pricing as its own strategy, we always recommend keeping value in mind, even if it’s not the primary method you’re using. This can help you decrease risk by ensuring you don’t start with a price that’s too high when price skimming or undersell yourself with competitive pricing.


Pricing is a complex and unstable process, after you settle and test your pricing strategy, watch your results and be ready to fix them according to the time variables and the psychological and economic factors that may happen to the target customer segment.

It is possible to settle on one or more pricing strategies, according to what suitable for your selling goals and the market situation.

Now, we talked about different healthcare pricing strategies with some examples, but we shouldn’t forget methods of payments because it affects the final pricing decisions.

sometimes, payment methods affected by some general authorities like Ministry of Health, General Authority for Health Insurance etc.

Broadly the following are the systems.

  1. Fee for Services (FFS).
  2. II. Diagnosis Related Groups (DRG).
  3. III. Prospective or Fixed Reimbursements.
  4. IV. Retrospective Reimbursements.

And We will talk about this subject in detail next article.

Please don’t forget to share your thoughts and best with HBC in the comments and let us know your opinion about the pricing strategies in healthcare. If you have valuable content to share on Healthcare Business Club you can publish your content for free, please don’t hesitate to contact us at any time.

Ahmed Ezz Eldin
Ahmed Ezz Eldin
Ahmed M. Ezz EL-Din, MBA - is a Senior Cost accountant for healthcare services in Egyptian General Authority of Health Insurance, Former member of the Standing Committee for Pricing of Medical Services in universal health insurance (UHIO), experience in calculating healthcare services costs and preparing price lists for health care services, has established the cost system in many governmental and private hospitals also participated in preparing healthcare service price lists in the Egyptian Ministry of Health and Universal Health Insurance (UHIO)

Related Articles

Subscribe to our newsletter

Get notified about our latest news and articles. We are not spammy, we promise.

Latest Articles