Bayer launches data driven outcome-based pricing
Bayer introduces a new, data science driven pricing system for recommendations in the United States, based on FieldView yield prediction.
Bayer Crop Science will change the way it markets products to farmers in an attempt to better share risk, reports agweb.com.
Outcome-based pricing
According to Liam Condon, president of Bayer Crop Science, the company uses data science to make specific recommendations to the grower and give them outcome-based pricing. “If you don’t achieve the outcome we predict you, don’t have to pay for that outcome. If you achieve more, we share in that incremental value.”
If Bayer’s models tell you to apply fungicide at VT for a 3 bushels per acre gain, and you only gain 2 bushels per acre, you get a refund on some of what you paid for the fungicide. Alternatively, if you gain 6 bushels per acre, you’d pay some of that value to the company after the fact. Anything above a 10 bushels per acre gain above expectation would be for the grower.
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Not just for seeds
“It’s not just for seeds, it’s for fertility, fungicide/crop protection prescriptions as well,” Mike Stern, Bayer’s head of Climate Corporation told agweb. “Even though we might have to refund some, the grower is most likely in a good spot and we’re still selling fungicide. All recommendations are based on the fact that we can bring data profiles in.”
The new system will be based on information gathered in Climate Corporation technology such as FieldView. The information users enter in will inform recommendations and anticipated outcomes.
Bayer does not yet have a launch date for the new pricing system.
