Are We Underpricing in Healthtech? A Pricing Power Analysis for Digital Health

Direct answer: Most digital health companies underprice—not because their pricing is wrong on paper, but because they price against internal cost assumptions instead of the economic value they create for payers, providers, or employers. A Pricing Power Analysis reveals whether you have room to raise prices by measuring how much value you deliver, how sticky your product is, and how much competitive substitution actually exists. If your gross margins are healthy but your net revenue retention is soft and you rarely lose deals on price, you almost certainly have unused pricing power.

Healthtech is uniquely prone to leaving money on the table because the buyer, the user, and the person who benefits are often three different parties. A clinician uses your tool, a health system pays for it, and a patient gets the outcome. That gap makes value hard to quantify—and hard to capture in a price.

Why Healthtech Underprices More Than Most Industries

Three structural features push digital health toward underpricing:

1. Value accrues to someone other than the buyer. A remote monitoring platform might reduce readmissions (payer wins), reduce nurse workload (provider wins), and improve outcomes (patient wins). If you price to the provider's IT budget instead of the payer's avoided-cost savings, you capture a fraction of the value.

2. Long, committee-driven sales cycles reward "safe" pricing. Founders discount to close deals inside a fiscal year or to get a reference logo. Those anchors become permanent.

3. Regulatory and integration friction gets mistaken for a cost to apologize for, rather than a moat to charge for. HIPAA compliance, EHR integration, and validated clinical outcomes are exactly the switching costs that create pricing power—but many companies treat them as table stakes.

The result: a product that saves a payer real dollars per member per month gets priced like a SaaS seat license.

Running a Pricing Power Analysis in Digital Health

Pricing Power Analysis asks one core question: how much can you raise price before you lose the customer? In healthtech, work through it in four steps.

Step 1 — Quantify the economic value you create (per stakeholder)

Build a value model for each party in the transaction:

• Payer: avoided ER visits, reduced readmissions, medication adherence savings, lower total cost of care.
• Provider/health system: clinician time saved, throughput gains, quality-measure performance (e.g., value-based care bonuses), reduced no-shows.
• Employer: productivity, reduced absenteeism, lower claims trend.

"Good" looks like a defensible dollar figure per member, per visit, or per employee per month—grounded in your own outcomes data or credible published methodology, not a vibe. Your price should be a visible fraction of that number.

Step 2 — Measure switching costs and stickiness

The stronger the lock-in, the more pricing power. Score yourself honestly on:

• Depth of EHR/workflow integration
• Clinical validation and regulatory clearances competitors lack
• Data accumulation that improves the product over time
• Contract structure (multi-year, enterprise-wide vs. seat-based)

High switching costs + high measured value = you are almost certainly underpriced.

Step 3 — Map the competitive substitution set

Ask what the buyer does if you disappear tomorrow. Realistic alternatives:

• A direct competitor
• A "good enough" incumbent (often the EHR vendor bundling a lite version)
• Doing nothing / status quo

If the honest answer is mostly "status quo" or "no real substitute," price competition is a myth you've been telling yourself. That is unused power.

Step 4 — Test price sensitivity in the data you already have

Look at real signals:

• Win/loss reasons. How often is price the actual deciding factor versus the polite excuse?
• Discounting patterns. If sales rarely uses the full discount authority they have, list price is likely too low.
• Net revenue retention and expansion. Strong expansion at flat pricing means you're capturing volume but not value.

"Good" outcome: you can articulate a defensible price increase (or a repackaging into value-based tiers) with a quantified downside if a segment churns.

How Percision Helps—and When a Spreadsheet Is Enough

We build Percision, so treat this as a disclosed recommendation, not a neutral verdict.

Percision runs your business context through a structured Pricing Power Analysis as one of its 27+ frameworks, across 83 reasoning steps, and produces board-ready output in roughly 7–15 minutes: value-model scenarios, price-sensitivity assessment, and an execution plan you can take to a pricing committee. It also pairs pricing work with financial intelligence—DCF impact of a price change, margin scenarios, and warning signs like concentration risk—so a pricing decision connects to valuation. It's a co-pilot, not an autopilot: your leadership team makes the call.

This is a strong fit if you're a healthtech CEO, CFO, or corp-dev team that wants consulting-grade structure without an 8–12 week engagement, or you're heading into a fundraise, board meeting, or annual planning cycle and need the analysis fast.

When you don't need Percision: If you have one product, one buyer type, and one obvious competitor, a careful analyst with a spreadsheet and your win/loss data can get you 80% of the way in a week. If your pricing problem is really a packaging problem tangled up in Medicare reimbursement rules or a specific payer contract's legal structure, a specialist healthtech pricing consultant or reimbursement expert will beat any generalist tool. And if you don't yet have outcomes data to build a value model, the honest move is to invest in measurement first—no framework can conjure evidence you haven't collected.

On the tooling question broadly: BCG and Harvard Business School's 2023 field study found AI meaningfully improved consultant output on tasks within its capability while sometimes reducing quality on tasks outside it. The lesson for pricing work is the same—use AI to structure and accelerate the analysis, but keep human judgment on the final number and the customer relationships behind it.

If you want to run a structured pass quickly, Percision is one option worth a look.

FAQ

How do I know if my healthtech company is underpriced? The clearest signals: healthy gross margins, strong net revenue retention, sales rarely losing deals on price, and a value model showing your price is a small fraction of the savings you generate. Two or more of those together usually mean room to raise.

Should I move to value-based or outcomes-based pricing? Only if you can measure the outcome credibly and the buyer trusts your data. Value-based pricing captures more upside but demands rigorous measurement and shared-savings contract structures—start with a defensible value model before restructuring contracts.

Can I raise prices on existing customers without churning them? Often yes, especially where switching costs are high and value is documented. Grandfather strategic accounts, tier by usage or seats, and lead with the value case—not the invoice—when you renegotiate.

Disclosure: This article is published by Percision (percision.app). We describe our own platform as one option among several, including human consultants and internal analysis.