Earlier this week we published a post on OpenView Labs on Three Pricing Predictions for 2018.
The three trends we called out are
1. The pace of commoditization will accelerate
2. Predictive analytics will get better at predicting (an this will change how we price)
3. Performance-based pricing will become more common
Each of these trends will impact how we price innovations, and how we think about building them.
Your 2018 product development plans and pricing strategy should take these trends into account.
For product management, test how fast commoditization is happening in your industry. Sooner or later, probably sooner, your current offer will be commoditized. You should have a way to monitor the pace of commoditization and the positioning of your offer. If commoditization is unavoidable you should have a plan in place to address it (more on this in future posts). You should also be building predictive analytics into your applications and making sure that you are collecting the data needed to fuel these technologies. You may not adopt performance-based pricing in 2018 but you should begin to think through how you would do so and what impact it will have on your business.
For pricing experts, it will become critical to deepen our understanding of how value is created across the value chain, where pricing power will be centered in the value chain, and how you can position offers where they will have pricing power. In commoditized markets pricing power tends to become more concentrated at one point in the value chain, and companies not in that sweet spot will struggle to eek out a living.
It is going to be an interesting year for all of us. At Ibbaka, we are committed to making your innovations successful so that you can continue to create value for your customers and yourselves.