Value models integrate different types of information: about the customer, about the improvement claims, about the industry and economy along with assumptions that are part of the model. Bringing these different types of information together drives insights that are not available when the data is managed in silos.

Many companies focus on cost reduction as the easiest value driver to define. But there often cases where revenue is a more powerful value driver. Why do so many pricing and marketing teams default to cost value drivers? Revenue value drivers are playing a key role in green or sustainable solutions.

What data do you need to capture in order to design and manage pricing? Your value model holds the answer. Build a value model, identify the variables, and see which of the variables can be set through your solution.

What role should pricing play in sustainability? The place to start is by adding sustainability models to the set of models used to make pricing decisions. Then explore how pricing can nudge people towards the solutions optimize sustainability.

Generative AI is attracting a lot of interest as an innovation platform. How will generative AI be used to create value? How will that value be priced?

We have entered an AI renaissance. What flavours of AI will have the biggest impact on pricing over the next three years? Here are the top three candidates: predictive analytics, computational game theory, large language models.

SaaS pricing is sometimes described as data driven. It is actually model driven, with data being the raw material used to build and adapt the models. It is the interaction of three models that guides pricing. The value model, the cost model and of course the pricing model itself.

EVE, or Economic Value Estimation, quantifies the monetary value created by an offering for a particular customer versus their next best alternative. Since value is at the center of pricing strategy, modeling economic value estimation becomes critical in value-based pricing.

A value model is a system of equations built from value drivers that estimates how much value a solution will provide to a customer or set of customers (market segment).

Ed Arnold will be giving a talk at the Professional Pricing Society’s Spring Conference in Chicago on “The Art of Value Storytelling”. Ed has deep experience developing value models for B2B companies and using these models to inform pricing design. The model is what lies below the water, what most customers want to hear is the value story.

At Ibbaka, we often come across organizations who struggle to support their sales team in their value-based selling endeavours. Sales teams often find it difficult to defend pricing and communicate the differentiated value of the offer.
With that in mind, we developed The Ibbaka Value Pricing Dashboard which is a software as a service (SaaS) application that connects value to price, and helps organizations quantify and demonstrate the value that they deliver to their customers.

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.