Prices change, and usually downwards. Determining how quickly they are likely to change is of great importance to strategic decision making. The Experience Curve is a well established tool in marketing and price analysis and can provide an informative snapshot of the market for a product by plotting the average price of a product against experience, represented by the cumulative volume of sales in the market. What is found is that prices decline by a fixed percentage with each doubling of experience.
MATCH researchers have found that the Experience Curve can be used to describe medical device price behaviour, and that a significant number of medical devices exhibit slower price decline rates than the typical 70 – 80 % rates seen in other industries.
The MATCH experience curve calculator will allow manufacturers to quickly assess the experience curve slopes for their products and therefore make better informed decisions in strategic planning and new product assessment. Medical Device purchasers will also be able to use the tool to see how the prices of the product lines that they purchase are changing with experience and improve decision making in price negotiations.
Figure shows an experience curve for Automated External Defibrillators (AEDs), with a slope of 76%, meaning that the unit declines to 76% of its previous value with each doubling of experience.