It’s great to see that “pricing to value” has become such a popular pricing strategy in B2B. At PricingBrew, we see companies and pricing teams in nearly every sector and geography striving to take a value-based approach toward pricing and negotiation.
But good intentions don’t guarantee good results. And value-based pricing initiatives are not a slam-dunk. While many initiatives have been very successful, some have struggled much more than anticipated. And some initiatives have actually failed.
So…is success in value-based pricing just a roll of the dice? Are the challenges unavoidable and out of our control?
We don’t believe so. Value-based pricing initiatives that struggle tend to suffer from one or more of these completely solvable problems:
- No Customer Research—Relying on internal opinions and conjecture about what prospects and customers really value and why.
- No Competitive Analysis—Failing to develop an objective and relevant perspective around how the alternatives really compare.
- Shallow Value-Drivers—Defaulting to only the most obvious value-drivers, or focusing only on product-related value-drivers.
- Weak Value Messaging—Expecting the numbers to tell the story, rather than developing compelling differential value messages.
- Lack of Sales Support—Failing to involve and engage the sales team through the process, and really “sell” them on the value case.
Simply put, value-based pricing initiatives tend to struggle when the teams involved really haven’t done the homework.
For success with value-based pricing, it’s not enough to just sit in a conference room and spin-up some formulas and numbers in a spreadsheet. After all, value-based pricing isn’t really about the numbers themselves—it’s about the customer understanding and competitive insight those numbers represent.
To get beyond the buzzwords and really make value-based pricing work in your organization, check out these on-demand resources:
- Seven Steps to Identify & Capture Your Value—The seven fundamental process steps that are crucial for success in value-based pricing.
- Crafting Effective Strategic Value Messages—How to develop compelling sales and marketing messages that highlight your differential value.
- Identifying Value Along Five Dimensions—A variety of value-drivers that can maximize the perceived value and differentiation of your offerings.