Value Based Pricing Strategy

Setting the optimal price for products and services can be challenging for many organizations. Everybody from marketing, finance, sales, and the executive c-suite seem to have an opinion on what to charge. Value Based Strategy focuses on developing key organizational capabilities focused on how to create and capture value. Executing a value based strategy starts by embedding customer value into key steps of your innovation process and continuing through your launch and go-to-market strategy. The end result is a pricing strategy that aligns price with the value your solutions deliver to customers.

Objectives

Outcomes

ROI

Watch Outs

Develop organizational capabilities that focus on customer value creation
Design offerings that are aligned with the value you deliver
Build new pricing capabilities
Design a pricing structure to maximize profits

Develop and go-to market with solutions that are aligned with customer value
Ability to capture a fair share of customer value through price
Higher confidence in offering structure and price levels
Marketing and Sales team alignment with clear direction on how to sell and capture value
Ability to measure and demonstrate value to customers

The impact of a well executed value based pricing is significant, especially when over 70% of product launches fail to meet revenue and profit objectives according to multiple studies. We estimate that the returns on investment ranges from 10x - 20x.
In addition, studies show that focusing on pricing can have a two to four-times greater impact on profits vs. customer acquisition and retention.

Embedding value-centric steps into your value creation and value capture activities may require a healthy dose of change management
You may face some skepticism or resistance from both product and sales team therefore taking a small step approach that targets "quick win" it is critical for success.