THE VALUE & PRICING BLOG
The latest stories, blog articles, and pricing news from the Ibbaka team
Usage-based pricing a complement and not a substitute
Usage-based pricing is one part of value-based pricing but it is not the whole story. Recent research from the Subscribed Institute finds that usage-based pricing has the biggest impact on revenue growth when combined with other pricing metrics. Why is this? We look at why usage-based pricing drives higher growth up to a point, and why an excessive reliance on usage-based pricing can slow growth.
Why Value-Based Pricing means something
Value based pricing is widely misunderstood. Some people think it can be reduced to willingness to pay (WTP). It cannot. In a recent LinkedIn post Robert Ribciuc asked nine rhetorical questions about value based pricing. We answer them here.
What gets measured gets managed - How to measure your pricing
There is an old saying “what gets measured is what gets managed.” Most companies do not do a good job of managing pricing. Is that because they do not measure it? What aspects of your pricing performance should you be measuring? How will those measurements help you to manage pricing? We conclude with three critical measures you need to get started.
From Value Networks to Systems Thinking: System Dynamics Modeling and Pricing
Guest post by Fabian Szulanski in which the connections between value networks and systems thinking are explored. Systems models can be quantified and the feedback loops made explicit, which makes system models a better approach to investigating the impacts of interventions and different pricing tactics.
Your pricing model needs a value model
Most companies have moved from having a price to having a pricing model. This is a necessary step towards the next generation of pricing excellence. But a pricing model without a value model is adrift. It does not help align the value to customer (V2C) to the price. It is only half the story. Effective pricing strategy requires that we connect a value model to a pricing model.
How to use indexed pricing as the economy recovers from the pandemic
The economy will emerge from the pandemic at different times and speeds depending on sector and geography. This will be a tactical challenge for most pricing experts and it will be easy to make mistakes and get your timing wrong. A solution is indexed pricing. Demonstrate that you understand your customer’s business by usinng indexed pricing.
From willingness to pay to ability to pay (managing pricing in a time of uncertainty)
Willingness to Pay (WTP) is one of the most popular ideas in pricing. Many software packages or consultants will tell you that they can calculate your customer’s willingness to pay and use that to set prices. What happens when willingness to pay collides with ability to pay? Or when there is compelling community need that transcends either.
What pricing actions are being taken in response to COVID 19?
“Everyone has a plan until they are punched in the face.” Mike Tyson famously said. Many of us feel like we have been punched in the face and are scrambling to respond and not react, adjusting our pricing, applying discounts and changing terms of trade on the fly. Willingness to pay has been replaced by ability to pay or even interest in paying. Let’s share how each of us are responding.
Pricing under uncertainty and the need for usage based pricing
In a time of great uncertainty transfer risk from your customer to yourself. One way to do this is with usage based pricing. Layering in usage based pricing is a good pricing strategy to increase willingness to pay (WTP).
Wallet Allocation - Net Promoter Score - Pricing
Is pricing a lever that can impact Net Promoter Score and Share of Wallet? How do these interact with
One day soon most of us will be pricing services
Services unfold over time, and when you design a service and its pricing you need to make sure to consider how emotional and economic value unfold over time. Find some way to make sure buyers get at least some economic and emotional value early on.
Pricing strategy changes across the technology life cycle
Pricing has important transition points across the technology adoption cycle. How you think about value and use it to shape your pricing strategy changes as your buyer’s motivation changes. It is critical that leadership, investors, product and services managers and marketing understand these transitions and price products or services appropriately for them
Changing your pricing metric can change willingness to pay (WTP)
Willingness to pay (WTP) is one of the most frequently abused concepts in pricing. Many people try to use it as a proxy for value. It is not. Other companies claim they can estimate willingness to pay through surveys. This is too simplistic. Why?
Willingness to pay is determined by framing and by the value delivered to the customer relative to the alternative. To measure willingness to pay without taking these into account is wasting an opportunity to really understand your customers and position the value you are providing.
Never miss an update
Subscribe to the Value & Pricing Newsletter to get insights that help you supercharge your growth.