Set a Price and Pricing Model for a Drug That Makes Sleep Unnecessary

A company has just brought to market a drug that lets people go without sleep. Decide how you would price it: what objective the price serves, who the buyers are, which pricing model and structure you would use, and what price you would start with. ```hint Define what one purchase buys Before picking any number, settle what a buyer gets for one purchase (one night awake, a month, a lifetime) and who actually pays for it, because both change the unit you price and the value behind it. ``` ### Constraints and Clarifications - The interviewer has confirmed that what it cost to develop the drug, and what it will cost to market it, should play no part in the price. - The drug is safe: it has no side effects and can be taken indefinitely. ### Clarifying Questions - Does one dose remove the need for sleep for a single night, for a longer stretch, or permanently? - Is it sold over the counter or by prescription, and through which channels: pharmacies, direct to consumers, employers or governments? - Is the company aiming for maximum profit, the fastest adoption, or the broadest access? - What does each extra dose cost to make, and how long will the company be the only seller? ### What a Strong Answer Covers - A clear unit of sale and pricing objective, consistent with the facts the interviewer gave about cost and safety - Buyer segments compared on the value of extra waking hours, how often they would use the drug and their ability to pay, with a launch focus chosen - A pricing method chosen over the alternatives, and a price structure chosen and justified, including how it holds up if buyers switch between options or resell - A starting price built from labeled assumptions with correct arithmetic, sanity-checked against the value to buyers and the ways they stay awake today - The social and regulatory risks of how the drug is priced, plus a plan to test and adjust the price ### Follow-up Questions - How would you test the price before a national launch, and what result would make you change it? - A hospital network wants to buy doses in bulk for its night-shift staff. How would you price that deal, and what concerns would you raise first? - How would your pricing change once a competing drug reaches the market?