Case Study – Pricing: ASP Stabilization

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Business situation: Company’s flagship product was reimbursed either via a bundled rate (Outpatient) or through Average Selling Price (ASP) + 6% (PVT/ASC) depending on the site of service (40:60 split). The calculated ASP per unit was based on the weighted sales of all sizes sold through all sites of service. Sizes ranged from 1.5 units to 49 units (15 sizes). Changes in mix caused significant fluctuation in calculated ASP, which was the basis for reimbursement in the PVT/ASC site of service. Stabilization and predictability was the desired outcome.
 

The approach: Developed a Monte Carlo model that used sales actuals and forecasts to estimate the impact of changes to sales & product mix on ASP. All promotions and larger deals (n> 25) were evaluated using these models.
 

Business outcome: The model was in use for more than 5 years and helped support growth from $28M to $250M.