Seeking your advice on hardware maintenance pricing

Founder, Ascenda Medical Marketing | Expertise in Advancing Medical Technology

November 2018

< 1 min reading time

Hello, MedDevice Group!

I am helping a client with all-things-marketing and finalizing their launch plans for a US launch. They have a hardware/disposable model and the hardware will be priced upwards of $60K to cardiac centers. The units will come with a 2-year warranty but will require an annual tune-up; how have you typically seen this done before?

Options as we see them:

1) Create two item codes, one for warranty period maintenance + one at a higher price for post-warranty maintenance; or,

2) Build the tune-up cost into the price of the hardware, which does increase the hardware pricing by around $12-15K.

Thoughts? Have you seen this done in other creative ways?

We’d like customer compliance in using our maintenance plan, as we don’t want system downtime. Thank you in advance!

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Posted by Amy DeWinter

Asked on November 6, 2018 4:50 pm

168 views

	Private answer Joe Hage Amy, does the company have precedent with anything like it? In the absence of better information, what does the company think the customer will do at the end of the two-year warranty? Not renew? Is that what we’re really solving for: How to make sure we get revenue in year three and beyond? If so, I’m thinking, let’s make the sale first! We can worry about “Year Three” later! Marked as spam Report spam
	Private answer I’m assuming the 2-year warranty cost is included in the “upward of $60K” pricing. The warranty covers defective parts only, not misuse or tune-up costs. The tune-up should be sold as service, and misuse with an insurance. So you could combine both or keep each as yearly service for tune-up and damage coverage. A service agreement is very common with complex scientific instrument and they typically become a profit center for the company. Most users expect and many would pay $6-7K (about 10-12% of the instrument) per year for the peace of mind to keep their instrument usable and operational to specification. Marked as spam Report spam
	Private answer Joe Hage Well, there you have it, Amy! Opinions from not one but two Hages! Marked as spam Report spam
	Private answer Amy DeWinter Thanks for this feedback, Hages! And yes, Amer – the warranty would be included, but any misuse or tune-ups would be additional maintenance not covered. Marked as spam Report spam

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