Value pricing is a customer-centric strategy that sets prices based on the estimated economic value of a product or service rather than purely on market benchmarks or internal costs. When executed correctly, this powerful approach can increase profits and customer satisfaction. The challenge is aligning price with value delivered.
I recently reflected on what might cause sellers to reassess their value pricing and value selling strategies in a changing economy. While both are rooted in value, value pricing and value selling use different tools with different purposes and reference sets. Let’s take a moment to review the basics.
Few people like to talk about money during the sales process. Eventually, though, buyers will ask, “How much does it cost?” If the price is more than nominal, they probably need budget approval. How well can your sales team shift the conversation from finding and solving customer problems to money?
I’ve heard it all when it comes to pricing strategies. Clients say they use a premium pricing strategy, or penetration pricing, or (pick your own) pricing strategy. But really... what is the one and only goal of pricing when you want to make a profit?
To effectively sell based on value, you need to first grasp the value your offering creates. That is where Grassroots Strategy comes in. Jeff Bennett and I recently published Grassroots Strategy: Cultivating B2B Growth from the Ground Up to share what we’ve learned about building marketing strategies around customer needs and proper pricing strategies.
Marketers and sellers need to know how much their offering is worth to customers. This knowledge helps acquire qualified leads and close more deals. Unsurprisingly, buyers want the same information and need to know how much your offering can lower costs and grow revenue.
One of the biggest challenges in sales is getting buyers’ attention. And even when you do get a phone call set up, too often buyers on the other end of the line are clearly multi-tasking and not paying full attention. The panacea is to provide buyers with meaningful insights. Follow the five steps below to create deeper buyer engagement, which will lead you from initial contact to sealing the deal on renewals and future sales.
Our series on value pricing wraps up with three pitfalls that can jeopardize future sales, customer satisfaction and of course, your bottom line.
Previous posts in our series on value pricing have examined its risks, rewards, and mechanics, all with the goal of maximizing earnings for your company. Let’s expand on this foundation with practical tips and methods for considering the impact and likely market response to your pricing decisions.
As we discussed in the first post in this series, Value Pricing: What to Avoid at All Cost, there are many different ways to set the price of your offering, including cost-based, psychological-based, and market-based pricing. Now let’s look at value based pricing and why it is the most effective way to maximize return on investment from your offering.
