CASE STUDY

SpendEdge’s Cost Price Analysis Solution Helped a US Medical Products Company to Grow International Business by 170%

Aug 21, 2019

US Medical Industry Overview

US medical products companies are highly regarded for their innovations and high technology products. However, the quest to improve the performance of their current products has forced them to scout for new technologies. Companies of today look to partner with Contract Manufacturing Organizations (CMOs) for the current line of products. Most firms constantly look for suppliers who can leverage existing methodologies of manufacturing. However, all this requires companies to set prices on an international scale while considering factors such as strict government regulations, new clinical trials & data, long-term contracts, complex RFP/tender processes, and large purchasing groups. 

Business Challenges Faced

The client, one of the fastest-growing division of Fortune 500 medical products company, was facing a global pricing challenge. Their price negotiations with suppliers varied across different offices in 33 countries due to a lack of accurate pricing data and processes. This was making it difficult for them to make informed price, volume trade-off decisions, and develop an effective pricing strategy on a global scale. The client, therefore, decided to leverage SpendEdge’s expertise in performing cost price analysis and providing detailed supplier insights.

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Our Research Approach

To cater to the specific category requirements of the client, the cost price analysis experts at SpendEdge conducted a thorough analysis of the transactional data from the past year for the same products and services. They determined the viability of the current quotations and buying behavior per segment and country. They also asked five key suppliers of their prices for the same product to analyze price trends for the same commodities. This helped the client to define optimal price points in different countries.

After determining the profitable price points, the experts helped the client to develop an effective pricing strategy. The strategy was a scalable solution that better facilitated the annual price-setting process. Based on geographic differences and complexities, the client developed a cost price analysis template. The template helped the client to play-out different price volume trade-offs for different regions and evaluate if margin goals were met.

Engagement Outcome

The comprehensive cost price analysis helped the client to aggressively grow the international business by 170% by the end of the forecasting period. The client stopped undercutting its margins and documented pricing guidelines to navigate factors impacting the prices. The improved cost price analysis capabilities further helped the client to better position themselves against competitors while negotiating with suppliers.

Conducting cost price analysis is crucial for companies to better negotiate with suppliers. Subscribe now to access accurate cost and pricing analysis insights from our procurement experts. 

Best Cost Price Analysis Techniques

Price analysis

  • Ask more than three suppliers to bid for the same product to determine if a particular price is reasonable or not. This will help you to analyze the total cost of acquisition and achieve maximum cost savings.
  • Create a list of similar items and services that are available to customers while comparing list prices. Also, consider standard industry discounts for the items or services while performing cost price analysis.
  • Sometimes, the prices of certain commodities are set by a law. When this occurs, there is usually a pricing structure for reference. Refer to the set guidelines while procuring such items.

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