If you are in technology marketing, you are probably familiar with Geoffrey Moore’s Maturity Life Cycle. Moore looks at how a technology product’s market evolves over time. This blog is the first of a series, covering the early market.
Ibbaka helps you execute on value-based pricing. This is a pricing strategy where your price is based on the differentiated value you provide to your customers. The alternatives to value-based pricing are cost-plus pricing (good for contracts where the deliverables are poorly defined and controlled by the client), transactional pricing (what happens with commodities), market following pricing (if you have little pricing power) and various forms of auctions (growing in importance as M2M pricing becomes more common).
User-based pricing has gotten a lot of bad press recently. It is generally seen as a lazy pricing metric, used by companies that have not thought deeply about their value metric and how to connect the pricing to value. But there are many cases when user-based pricing is the best metric and should be used.
Monetizing data is a growing topic of conversation globally. The proliferation of data and the Internet of Things (IoT) is providing a lens into understanding customer usage like never before. One that will help drive innovative models for data monetization. Yet, one cannot discuss the opportunities that come with big data without thinking about data security.
Understanding how a product or service offering creates differentiated value for the customer is the foundation of value-based pricing. Prices should align with the value the customer receives, thus ensuring the seller is maximizing returns from the customers and target the customers that derive the most value from the offering. These are the customers that will be happiest and most successful, the kind of customer you want to build a business on. For pricing to be effective, it should track the value metric. This is the unit by which the product or service offering is consumed that best reflects how the customer gets value.