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Value-Based Pricing Isn’t About the Calculators

When adopting value-based pricing, too many people get caught up in the tools. They spend weeks or months perfecting that ROI calculator or value-estimation spreadsheet. They argue over the embedded formulas. They hold committee meetings about the input interface and output formatting. And of course, they spend days training everyone up on how to use the tool before rolling it out with a lot of fanfare.

Of course, this extreme focus on the tools is also supported by the tools vendors themselves. Because they want to sell you their toolset, they don’t mind at all if you think that their complex tool or slick interface is going solve all of your pricing and differentiation problems. They don’t mind at all if you spend 80% of your budget on the tool and 20% of your budget on the stuff behind the tool. It’s not that they’re trying to con anybody…it’s just that they are in the business of selling tools.

It’s little wonder that so many tools-centric initiatives struggle to generate results. It’s not surprising when prospects and customers discount or disregard the outputs. And, it’s not a shocker when adoption and utilization in the field starts-off high…and then dwindles over time to the point where salespeople can’t even remember where or how to access the tools.

Because value-based pricing is not about the tools. Frankly, it’s not even about the value estimates.

Value-based pricing is more about gaining an accurate understanding of customers…what they want, what they need, the problems they are trying to solve, and what those solutions are really worth to them. The tools you use…estimators, calculators, and so on…are simply a way to help communicate and reinforce those understandings.

So make sure you’re focusing on what’s important. Don’t get so wrapped-up in the presentation of the information that you neglect quality, accuracy, and relevance of the information itself. After all, most customers aren’t stupid. And, they’re the foremost experts on what’s relevant to them…whether it’s presented through a 21-step estimation tool with animated waterfall charts or just scratched-out on a piece of notebook paper.

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