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Five Reasons Value-Based Pricing Fails

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:

  1. No Customer Research—Relying on internal opinions and conjecture about what prospects and customers really value and why.
  2. No Competitive Analysis—Failing to develop an objective and relevant perspective around how the alternatives really compare.
  3. Shallow Value-Drivers—Defaulting to only the most obvious value-drivers, or focusing only on product-related value-drivers.
  4. Weak Value Messaging—Expecting the numbers to tell the story, rather than developing compelling differential value messages.
  5. 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:

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