Pricing Strategies
Value-Based Pricing
Value-based pricing is a strategy where the price of the software is based on the perceived value it provides to the customer rather than the cost of production. This model aligns pricing with the benefits derived by the customer, such as increased efficiency, cost savings, or revenue generation.
TYPES OF SOFTWARE
Custom software solutions tailored to specific business needs, such as bespoke CRM systems or specialized analytics tools.
Advanced technology offerings, like AI-driven tools or big data platforms, where the value can be directly linked to competitive advantages or unique capabilities.
Niche market software that addresses specific industry challenges or regulatory requirements.
BENEFITS
Job Type
CHALLENGES
Difficulty in Quantifying Value: It can be challenging to quantify the exact value provided, especially for new or unique software.
Sales Complexity: Requires a skilled sales force able to articulate the value and justify the price.
Dependency on Customer Success: The perceived value must be continuously delivered and evident to the customer to justify the pricing model.
PSYCHOLOGICAL TACTICS
Anchoring: Presenting higher-priced options first to make the actual desired purchase price seem more reasonable.
Exclusivity: Positioning the software as a premium, exclusive solution that offers unique benefits not available elsewhere.
Testimonials and Case Studies: Using success stories and case studies to illustrate the value and build trust.
TESTING & FEEDBACK
Customer Interviews: In-depth interviews with existing and potential customers to understand their value perception and willingness to pay.
Pilot Programs: Offering the software on a trial basis to collect data on its impact and value in real-world conditions.
Segmented Pricing Trials: Testing different pricing with various customer segments to find the optimal balance between price and perceived value.
IMPLEMENTATION
Transparent Communication: Clearly communicate how the pricing was derived and the expected ROI for the customer.
Dynamic Pricing Capability: Implement systems that allow for flexible and dynamic pricing adjustments based on ongoing value assessments and customer feedback.
Value Tracking: Provide tools or reports that help customers see the ongoing value the software delivers, supporting the pricing model.
BEST FOR
B2B
FLEXIBILITY
Moderate
Value-based pricing offers moderate flexibility as it can be adapted to different customers or market segments based on perceived value. However, it may be less scalable than other models due to the need for constant value reassessment and customization.
REAL-WORLD EXAMPLE
Salesforce effectively uses value-based pricing for its CRM and cloud solutions. The pricing varies based on the edition (Essentials, Professional, Enterprise, Unlimited), with each tier offering additional features and capabilities that provide increasing value to larger or more complex businesses. This model allows Salesforce to align its pricing with the value perceived by different types of businesses, from small startups to global enterprises, ensuring that customers feel they are getting a return on their investment commensurate with the price paid.
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