How to price ... Ibbaka guides to value-based pricing decisions and tools
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
The current economic uncertainty is throwing up many challenges for people accountable for pricing decisions. Ibbaka is committed to contributing to the large community of people concerned with pricing and who need to shape, decide on and execute pricing choices. With this in mind, we are publishing a series of ‘How to price’ decisions guides and supporting them with simple tools to gather and analyse the information needed to inform pricing decisions. Some of these tools can even collect data to be uploaded into our analytical tools.
Tell us what are the most important pricing choices you face.
Who is responsible for pricing choices? Before we dive into this, let’s look at what we mean by pricing choices. Roger Martin’s Cascading Choices provides a powerful framework for this. We have layered the critical pricing choices onto this framework. For more on this see Pricing in the context of strategic choices.
Who makes these choices? This cuts deep into organizational design and culture, and will depend in part on where the offer is in the adoption lifecycle. The following table is suggestive not prescriptive and is primarily for companies that have product-market fit and are in mainstream markets. In general pricing authority migrates from product leadership to sales leadership to finance and operations leadership across the technology adoption cycle.
Pricing choices (and how to make them)
How to price …
For each of these choices we will be providing simple decision trees and tools (in the form of Excel spreadsheets and Powerpoint templates) that you can use to make these critical pricing choices. If you need help framing your choices, gathering and interpreting data, or in the detailed pricing design work, we are of course happy to step in and help you.
Pricing challenges (and how to respond)
What to do when …
Of course this is only part of the work that pricing needs to do. In addition to “How to …” questions there are the “What to do when …” challenges. Some of the challenges we will help you with are
Competitor actions
What to do when a competitor cuts prices? (Or increases prices.)
What to do when a major vendor offers comparable functionality for ‘free’
What to do when a platform company (multi-sided market company) enters your market
Internal conditions
What to do when your input costs change
What to do when your product strategy changes
What to do when you want to retire an old offer and move customers to a new offer
How do I migrate customers to a new pricing model?
Customer and markets
What to do when your customers change their business model?
What to do when market dynamics change? (And how to tell if they are changing.)
What are we missing here? What pricing challenges are you facing and how are you addressing them?
Contact us at info@ibbaka.com
Posts in our How to price series
How to price for SaaS transformation
How to price new functionality
How to monetize customer success
How to use indexed pricing as the economy recovers from the pandemic
How to price your learning resources
When to price predictive analytics
How to hire a pricing consultant
Pricing professional services is a challenge for SaaS companies