Tips and Tricks: Defining Your Market

  • A “top-down” analysis is based on current technologies or products that address the medical need your technology/product is intended to address, and the market defined by their sales figures.
  • The bottom-up analysis starts with identification and enumeration of the specific target patient population your technology/product will address.  What is the patient population and what are the trends projected over the development of your product and its lifetime on the market?
  • It is important in the pricing decision to consider who your customers and decision-makers will be. Each of these stakeholders may value your technology/product differently, so their roles and opinions will have to be factored into the pricing projection.
  • CoGS will be a key factor in development decision-making, with low-cost choices made to limit CoGS.  In the medical device field, the price typically needs to be four times CoGS to generate reasonable profit.
  • When you have an estimate of target patient numbers, price, and CoGS, you can do some simple math to get a revenue and profit forecast.