Drivers of value
Pricing is one of the most powerful tools to communicate the value of your products and services - especially to a marketplace that is not familiar with your offering. Particularly, value-based pricing principles come in handy when building your marketing messages and sales enablement tools. The process of value-based pricing can help succinctly highlight the value of the key benefits that your offering promises to its users or buyers.
Value Factors to Consider for Products
When you are getting ready to launch your next offering, consider all the value factors that go into your pricing structure. Here is a starter list of the value factors that go into a product’s price:
The quality of your inputs – materials, engineering, specific knowledge, innovative processes etc.
Product performance – quantified benefits of user outcomes
The breadth of channels to acquire your product
Packaging, various levels of pricing, and delivery options, including product bundles
Product roadmap, including the future benefits that will be available to users
Value Factors to Consider about Providers
Getting into a supplier relationship is a big deal - especially for B2B businesses where multi-year, cross-platform contracts serve more as a strategic partnership than a vendor-customer relationship. Keep the following in mind the next time you're justifying your value as a supplier:
Customer and/or install base – geographic representation, size, type, scale of customer adoption etc.
Strategic partnerships and networks
Track record on delivery on promise
Market knowledge and position
Customer retention metrics
Value Factors to Consider for Services and Solutions
On the services and solutions side, it’s essential to quantify and translate the successes of the past customers into benefits for your current leads. Particularly, how widely your services and solutions are being used is a powerful demonstration that you have delivered successfully in the past, and that the benefits of your solution is resulting in customer retention and loyalty.
Robustness and timeliness of your delivery framework
Customer satisfaction or net promoter scores
Time to value
Service level agreements – SLA metrics
Breadth of services and solutions
Responsiveness and turnaround time on your customer services
The effectiveness of your training and onboarding
Quantifying the Benefits of Your Promise
The core principles of pricing can definitely help quantify the benefits of performance, productivity gains, cost or revenue drivers, and the value of new capability building. The real challenge comes into play when you strive to quantify the value of the factors such as your know-how, networks, brand, and market position. To address the latter, a good place to start is to determine the set of all the relevant reference points. You can then add - or subtract, your value proposition in relation to those points – an effort which will likely require a powerful competitive analysis.
Ultimately, the value of your promise largely depends on your ability to deliver over and above your competitors, and that in turn determines your competitive position. Principles of value-based pricing can help to quantify and demonstrate the value of the differentiated benefits of your products and solutions. Learn more about the art and science of differentiated pricing and make sure to incorporate them in your marketing communications plan.
Ready to begin your own pricing innovation?