Subscription vs. Price per Cough

I emailed TK and I believe we all should read his response as it sets up our revenue pathway going forward. I received his permission to publish this. Please take note of Tony's last point at the bottom of this post.

Hi Tony
I hope you don’t mind but could you consider the following.
It seems ResApp has been forced or otherwise to change from a $ amount per cough to a monthly license fee. This is fine but I believe you need to communicate why this is better for our ongoing revenue. People are fickle and messages such as was communicated about minimal revenue is taken literally. Guidance about the change of direction is needed to educate us. You and I both have much to gain with the correct communication pathway.

Tony's response:

The simple answer is that subscription models encourage use. We are at an early stage of commercialisation and are optimising for adoption right now. The more doctors and patients using ResAppDx the more growth we will see.

When we are negotiating these licensing agreements our point of reference is the price per test as that is the most direct measure of value to the customer. When we are looking at subscription models we are looking at the expected number of tests multiplied by that price per test. As most companies do, we protect ourselves with tiered pricing and other charges if the actual number of tests is greatly above the expected number of tests. For any subscription we always use the $5-10 per test as our baseline assumption in negotiations.

Note also we didn’t say minimal. We said at this time they are not material compared to our current operating financial results.
Tony