PricingBrew

Insights & Tips

Already a subscriber? Login

Become a subscriber and unlock an information arsenal focused on making your pricing efforts more effective.

Why Your Economic Value Is Not Enough

At PricingBrew, we’re big proponents of value-based methods for pricing, marketing, sales, you name it. And our advocacy isn’t the result of faith in a popular trend, or subscription to a particular business dogma. No, it’s borne out of pure pragmatism…and a desire to work no harder than absolutely necessary.

We just figure that if it involves prospects and customers, it’s extremely difficult to go wrong using their perceptions of value as your starting point. And experience indicates that it’s true…it is indeed very difficult to go wrong using value-based methods.

Difficult…but unfortunately, not impossible…

The concept of economic value is one aspect of value-based pricing that B2B companies continue to struggle with. Now, the mechanics around estimating economic value aren’t really the issue. After all, the arithmetic involved is very straightforward. And companies aren’t even stumbling on the part about it needing to be relative to the alternatives. Here again, calculating a differential is a pretty simple thing.

So, where’s the problem with economic value?

From our perspective, companies run into trouble when they believe that economic value is all business prospects and customers care about. Companies struggle when they think that all that matters are the numbers, and anything that can’t be quantified down to the penny is tossed aside as unimportant or irrelevant.

The problem with economic value is that it’s not the only value.

The fact is, business buyers don’t make their purchasing decisions based solely on the economics involved. And anyone who’s made major purchasing decisions on behalf of their employer knows that there are all sorts of unquantifiable “intangibles” that can play a huge role in the decision—from the supplier’s reputation in the industry to whether or not the salesperson is really someone you want to spend a lot of time with.

Economic value is not enough. The numbers are not enough. Perceived value is a much bigger and broader concept than that.

Get Immediate Access To Everything In The PricingBrew Journal

Related Resources

  • Getting Started in B2B Pricing

    This 8-part course focuses on the critical concepts that B2B pricing professionals need to know. Whether you're trying to figure out where to begin or just want to ensure everyone on your team understands the fundamentals, this course can help.

    View This Tutorial
  • Better Product Management for Better Pricing

    In this on-demand webinar, learn how leading pricing teams are influencing the pre-market decisions that can increase pricing pressure and limit the prices you can command in the market.

    View This Webinar
  • Making Sense of Pricing Technology

    Are pricing technologies all the same? Do the differences actually matter? What do we need? How do we choose? In this webinar, we cut thru the confusion to help you understand your options for technology-enabled pricing.

    View This Webinar
  • Suffering from a Costly Case of Sticker Shock

    In B2B environments where discounting is habitual, it's easy to think that your list prices don't really matter all that much. But before you conclude that list prices are inconsequential in your business, consider this case of a B2B reseller who just couldn't see what they were missing.

    View This Case Study