ZS Case Study: The Price of Value

Business Issue

Determining if the price is right

It’s a problem for any company in every industry. You have a new great product, an existing base of potential customers and a compelling value proposition. But what will people pay for your product—and will it be enough to generate profits?

Medical Device Company Case Study


For B2B companies, the complexity of purchasing decisions and proliferation of information online makes pricing tricky at best; in medical devices, the complexity of health-care delivery makes the pricing issue just as difficult.

This creates a web of purchasing decisions that can include health-care executives, corporate managers, doctors, payers, patients and a host of other decision makers, each with an individual definition of value.

So launching a medical product that has a B2B customer base has pricing issues as complicated as any: What’s the true value of its features? What will different customers pay for any given feature? And how will the answers to these questions affect our customer segmentation and marketing approach?

The Problem

What’s the value?

A leading medical devices manufacturer had a new product that is sold to pharmaceutical companies. The company was facing a dilemma like many of its competitors—it would be difficult to determine what customers truly valued, and so finding an appropriate pricing structure would be a complicated, possibly problematic, exercise.

"We had used a cost-plus method of pricing," says a senior manager with the company. "In terms of selecting features, we might speak to a few rather than a whole array of customers, and not understand what individual features drove price."

If the company priced "correctly," it could immediately get a strong, profitable market share, given the differentiated nature of its new product; if it chose the “wrong” price, it could seriously hamper product performance and profitability.

The Solution

A unique methodology

Working with ZS, the company conducted extensive research that answered essential questions regarding its product’s price sensitivity, buyers' role in the purchasing processes and what would truly succeed as a value proposition.

Qual-joint modeling involved conducting interviews with 40 stakeholders, including the following:

  • Conjoint exercises in which respondents provided qualitative feedback in real-time on the "whys" behind their choices
  • Computing the relative values of product features and validating them in research with respondents, again in real time
  • Monetizing the validated relative values of product features

The Results

The ability to segment and price

The company could start to find the right pricing for its product, but the end results were ultimately of a much greater value:

  • The company could employ an initial pricing strategy and had estimates of customer willingness to pay for features.
  • Because it knew customers’ willingness to pay, the company could develop a high-level customer segmentation and appropriate targeting and messaging plans.
  • With pricing and segmentation data, the company kicked off an initiative to tailor pricing for specific customers.

"ZS shared our passion for this project," the senior manager says. “It didn’t feel as if they were going through the motions. ZS was truly interested, and quickly picked up what we wanted. That’s something you don’t always see.”