OpenView Venture Partners lives up to the promise of being a value-added investor and is a thought leader in areas like product-led growth and usage-based pricing. Each year, Ibbaka and OpenView publish our thoughts on pricing transformations for the coming year.

Pricing strategy and tactics change as software categories go through major transitions. These transitions can play out across the technology adoption cycle, be part of major changes (like the shift to SaaS) or part of the normal commoditization that all successful categories go through. The Digital Asset Management (DAM) category is currently going through the commoditization phase. This is what will happen.

What questions should you be asking about your pricing as we begin 2022? The potential impact of inflation is one. Higher interest rates are another. How will you use pricing to increase the value of your company?

There are many ways for an organization to grow and many possible growth strategies to adopt. One can take a sales-led growth, or product-led growth, or service-led growth approach. Growth can come from existing offers or new offers. It can be organic or come from acquisitions. One can grow in an existing market or enter new markets. What is your growth strategy for 2022? Please take the survey. The results will be shared in March 2022.

In his excellent new book, Pricing for Growth (Jeff Robinson), asks us to adopt a growth mindset for pricing. A growth mindset (as opposed to a fixed mindset) assumes we are operating in a world full of opportunities that learning is central to execution. Will you adopt a growth mindset for pricing in 2022?

How do you know if you are executing on a service-led growth model? Like any business model having a clear set of metrics that you are tracking and planning to is critical. For service-led growth, the metrics need to capture both sides of the service-led growth flywheel and the interactions. The best overall metric is net aggregate customer lifetime value.

The power of customer journey mapping is well understood in the service design world. Ibbaka has introduced swimlanes for value and price into the customer journey. It is important to remember that the customer journey is not a given, it is designed. Value mapping is the key tool to design the customer journey experience.

Choosing a pricing metric is the most important pricing decision you will make. It is what frames all of your pricing decisions. The pricing metric should track the value metric so that you can frame your pricing in terms of the value you deliver. Here is a simple process to help you choose your pricing metric.

Ibbaka speaks with a lot of people about value and pricing. Sometimes, when people hear that we are pricing experts, they assume that we are out to gouge buyers. This could not be more wrong. Good pricing aligns the interests of the buyer and seller.

Value-based pricing emerged from the need to price differentiated products and services in the B2B context. Price optimization models based on simplistic economic theories proved inadequate for complex solutions with multiple stakeholders in the decision making unit. But over the past two decades, applications have expanded, first to sales and marketing, then to product management and marketing and most recently to customer success.

People come to Ibbaka with many different pricing challenges. Sometimes these are symptoms for deeper problems. How can we organize the many different types of pricing challenge and diagnose the root causes?

Service-led growth offers a compelling alternative to product-led growth. It requires less investment capital and builds stronger and more durable relationships with customers. These relationships drive the insights needed for meaningful innovation. But is service-led growth relevant to manufacturing?

Sometimes we think of price as a number, the number, often ending in a 9 or 7 or 5, that we see on the pricing page. But to price effectively one needs to think of a price in the context of what is priced and how the price is presented. Price is a lot more than just the number on the price tag. It is how we frame value communicate differentiation.

Service-led growth (SLG) is a new approach to growing resilient, adaptive and sustainable companies. It is based on a growth flywheel that is kicked off with services, that lead to subscriptions, data is gathered to generate insights, that lead to new services. It is an alternative to product-led growth that is less dependent on external financing.

Customer value management (CVM) is the most important business discipline. It helps companies across the value cycle of create, communicate, deliver, document and capture value. The result is that companies can track V2C (Value to Customer) and make sure that V2C and LTV (Lifetime Value of a Customer) are aligned. This requires methods from value-based pricing.

Many organizations struggle to adjust prices for local markets. Price setting in these markets is often arbitrary but it does not have to be. One can adjust pricing for international markets in a way that is fair, consistent and transparent. The Service Design Network provides a recent example.

Inflation is raising its head. This will lead to pressure on pricing leaders to increase prices. Before making a knee jerk response, find out how inflation impacts your customers and the differentiated value you provide them. Ask what impact inflation will have on demand for your solutions.

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.

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.

The value ratio is a critical but frequently overlooked pricing metric. Tracing this metric is critical to your long-term health. Deciding what level to target is one of the most important Where to Play choices you make in pricing.