How Philips Healthcare Drives Profitability Through Value-Based Pricing with Daniel Cho

Daniel Cho has over 29 years of experience in the healthcare industry, currently serving as the Senior Director of Global Pricing at Philips Healthcare. With a background in sales, product management, and pricing strategy, Daniel has a unique perspective on how to effectively communicate value to customers and drive profitability.

In this episode, Daniel shares his journey into pricing and the critical importance of understanding the value your product delivers to customers. He emphasizes that pricing should not just be about features but about the economic, operational, emotional, clinical, and societal value that resonates with different stakeholders. Through real-world examples, Daniel illustrates how a well-structured pricing strategy can lead to stronger, more profitable relationships.

Why you have to check out today's podcast:

• Discover the five key value drivers that can transform your pricing strategy and enhance customer relationships.
• Learn how to effectively communicate value to different stakeholders within a healthcare organization, from CFOs to clinical staff.
• Gain insights into structuring contracts and pricing metrics that align with customer needs and perceptions of value.

"Resist on the discount as much as possible. Look for every other ways to solve it rather than the discount. The discount should always be a last resort and not the first thing you want to deliver or give."

– Daniel Cho

Topics Covered:

02:33 - Daniel's journey into pricing

03:23 - The power of pricing strategy, using segmentation and perceived value to differentiate identical products for distinct markets

06:58 - How two identical products can be integrated differently with existing pricing ecosystems

07:57 - Leveraging his expertise in data analysis to establish Philips' first pricing department

12:11 - Initiating a value-based approach at Philips to create, price, and articulate value

14:22 - Defining value and discussing the 5 key value drivers in a health organization

18:03 - Tailoring value propositions and demonstrating how those four other value streams ultimately lead to financial and strategic benefits

25:22 - An effective sales training Daniel created that teaches salespeople to tailor value-based pitches to different stakeholders' priorities

31:27 - Daniel's best pricing advice

Key Takeaways:

"We cannot continue to sell features and benefits, we have to go and sell value." - Daniel Cho

"If the product is not value-based, you can't ask the salespeople to sell value because you have to start from the product that actually deliver and generate value. So, we started from the product managers." - Daniel Cho

"The first one is economic value. Very simple. Help me to make more revenue or help me to save costs so I have an economic benefit." - Daniel Cho

"The next value is the emotional value. How can we create a better experience for the patients and also their own staff so the staff don't get burnout." - Daniel Cho

"Financial value, although as strong as it is, doesn't resonate with everyone." - Daniel Cho

"Stop giving discounts for free. Always get something back from the customer." - Daniel Cho

People/Resources Mentioned:

• Philips Healthcare: https://www.philips.com/
• Apple Watch Launch: https://www.apple.com/
• Bausch and Lomb Contact Lens Case: https://www.bausch.com/

Connect with Daniel Cho:

• LinkedIn: https://www.linkedin.com/in/danielkkcho/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: mark@impactpricing.com