If you’ve been paying attention to our publications at all, you know that we talk a lot about “value” here at PricingBrew. In some cases, it’s a subtle undertone. In other cases, we address it much more directly. But it’s true that the concept of value is infused into nearly everything we produce.
That said, some readers and subscribers will dismiss or ignore our entreaties toward value simply because they don’t price to it.
In other words, because they aren’t actually setting their prices based on segment-level value estimates or perceived differential value studies, they think the concept of value is largely irrelevant, given their particular pricing practices.
It goes something like this…
“For the foreseeable future, we’re just monitoring our competitors closely and trying to match their prices. So for us, spending time on value is probably a waste.”
But here’s the thing…
No matter how you actually go about setting your prices, your buyers are always judging those prices in terms of value.
From your perspective, sure, you might be matching the competition’s prices. But when a buyer goes to make a purchasing decision, they’ll be paying attention to the value differences they perceive between the various options. And all price-points being equal, they’ll decide to buy the offering with the greatest perceived value.
In this situation, while perceived value differences aren’t driving pricing premiums, they are driving purchase preference. And preference leads to improved close rates, customer acquisition, unit volumes, revenues, and profits.
The point is that even if you aren’t pricing to value technically, you’re still pricing to value conceptually, or in buyers’ minds.
So…you always need to understand your differential value and communicate it effectively in the marketplace. You always need to manage and maximize preference, even if you aren’t trying to capture premium. Customers always need to know the great deal they’re getting, even if the price is exactly the same. Customers always need to know how you stack up relative to the alternatives, even if the price is exactly the same.
And in the process, you may even discover that you should actually be setting your prices relative to value after all…because you have a surplus of preference that can actually be converted into a premium!
Crucial B2B Pricing Concepts
Pricing in a B2B environment is very different from pricing in consumer or retail settings. In this on-demand webinar, you'll learn about 12 ways B2B pricing is unique and 6 core pricing concepts that every B2B pricing person needs to understand inside and out.