Pricing is the only moment of truth in value capture – Part 2 – How to do it
PETER J. F. GOMMERS
Peter4Strategy, Oegstgeest, Netherlands
Abstract
This note (parts 1 and 2) suggests learning from real world examples of value pricing for products and services. It is important to realize that they are the outcome of many years of trying and failing and trying again. An approach in 4 major steps is recommended:
- Understanding customer needs
- Comparing your own offering versus competitors
- Embedding value pricing in a value selling journey
- How to create fair sharing as a foundation for long term equitable economic benefits for all parties
The process starts with your belief that you (can) create real value for your customers. The challenge is that what you think the value is may, not be (fully) correct. So, you need to be a little schizophrenic about this. On the one hand fully convinced and driven that you can bring superior value, but at the same time open and self-critical to want to learn what your customer really needs.
HOW TO DO IT
Of course, it is inspiring to see examples of value pricing in the real world for products and services as explained in the article ‘part a’ last month (1). It is important to realize that they are the outcome of many years of trying and failing and trying again. So how to approach it for yourself?
I have learned to see it in 4 major steps, that are not perfectly sequential and have several feedbacks loops.
The whole process starts with your own belief that you (can) create real value for your customers. The challenge is that what you think the value is may, not be (fully) correct. So, you need to be a little schizophrenic about this. On the one hand fully convinced and driven that you can bring superior value, but at the same time open and self-critical to want to learn what your customer really needs.
Understand what different customers need
Most teams have not done good enough customer needs quantification, nor competitive product/service comparison to allow solid value pricing. Also, value pricing is powerful for segments of the market, sometimes even indivi ...
