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What is Fixed-Fee Pricing, and How Does It Benefit Sponsors?

The way contract research organizations (CROs) are handling pricing is in desperate need of an overhaul. Many CROs win trials based on attractive upfront pricing, but the actual cost to sponsors over the lifetime of a trial may be significantly understated; the practice of using change orders to increase cost over time is a source of frustration for sponsors.

Next-generation CROs like Vial provide modernized, fixed-fee pricing models that better align incentives between sponsor and CRO. If you’re a sponsor looking to improve your budgeting and forecasting, fixed-fee pricing is the way to go. Here’s what fixed-fee pricing is and why this pricing model is beneficial for biotech sponsors.

What is Fixed-Fee Pricing?

Fixed-Fee pricing is a pricing model whereby CROs charge a flat fee for the entire clinical trial, regardless of how long it lasts. This pricing model differs from traditional FTE pricing, which charges a fee based on the number of staff hours spent on the trial. A fixed-fee pricing model guarantees a set budget for the entirety of a project based on the final protocol.

The Issue with Variable Pricing Models

The most common pricing model for CROs is the traditional FTE. FTE stands for full-time equivalent, and this model charges sponsors based on how many employee hours are spent on a project. This pricing model usually includes protocol or scope changes and change orders.

Sometimes unforeseen circumstances (such as new regulations) occur during clinical trials, and additional work may need to be done by CROs that falls outside the original project scope. Variable models allow CROs to itemize every cost, which can lead to sponsors feeling nickel-and-dimed.

The FTE pricing model can quickly inflate agreed-upon budgets, and the charges can be challenging for sponsors to contest. Varying pricing can harm sponsor-CRO relationships as it does not provide either side with a sense of ownership or partnership in the trial. Sponsors want to trust that they are not being taken advantage of by their CROs and avoid paying for changes or delays for which they are not at fault. With a variable model, sponsors have zero assurance that the budget will stay the same. An inflated budget can be severe for start-ups or small biotech companies that have limited resources.

How Fixed-Fee Pricing Benefits Biotech Sponsors

There are many benefits to using a CRO with a fixed-fee pricing model. Here are a few:

  • Transparent, predictable, and easy to understand.
  • Keeps costs low.
  • Shared accountability on commitments.
  • No surprises during the trial. All parties should have agreed on the terms at the outset of their relationship.
  • Aligns incentives between CROs and sponsors.
  • Builds trust between CROs and sponsors.
  • Creates upfront conversations and keeps communication ongoing. Both parties understand the expectations required of each other and work together towards meeting common goals (e.g., successful completion of clinical trials).
  • Sponsors have more control over where funds are being spent, thus improving efficiency while reducing costs.

How Vial Offers Fixed-Fee Pricing

Vial is a tech-enabled CRO delivering faster and more efficient clinical trials for sponsors at up to 50% less costs. Vial offers affordable fixed-fee pricing for clinical trials of all sizes.

How do we do it?

  • An experienced team committed to timelines – Our team are experts at meeting agreed-upon timelines through clear communication and transparency during all trial phases.
  • Next-generation technology – Our intuitive tech platform integrates multiple trial procedures, from data management and recruiting to reporting, all in one seamless system. Process automation streamlines workflows for both sponsors & CROs.
  • Transparency – We remain flexible during negotiations and are upfront about costs at the start. Vial reserves the right to modify pricing in accordance with amendments to the study design or protocol made by the sponsor.

Ready for no-nonsense pricing?

Fixed-Fee pricing is a promising alternative to FTE pricing, allowing sponsors more bang for their buck. While many factors go into deciding whether to switch from FTE to fixed-fee, most organizations find fixed-fee pricing more beneficial.

Vial is an affordable, full-service, global CRO offering clinical trial management solutions for Phases I-V. Save on your next trial, connect with us today!

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