Pricing can be a complicated and confusing topic. Instead of diving head first into choosing pricing models and setting prices, it is crucial to understand the basics. In this post, I have outlined the five must read blog posts for a crash course in pricing.
First we can take a look at how pricing is designed. This quick checklist shows the best practice and how it should be applied to pricing. Don’t worry if you are not familiar with all the terms used, as the key concepts will be expanded upon later.
Now that we have an overview on how to design pricing, we can learn more about the terms used. In the B2B environment, there is a greater focus on economic value: the exchange value of a product or service. There are six basic categories for economic value drivers: increased revenue, reduced expense, reduced operating capital, reduced capital investment, reduced risk, and increase options. It is also essential to understand emotional value. This blog post explains the concept and its importance within B2B.
Next is to understand market segmentation. This blog explains how market segmentation ties into value-based pricing and the significance of differentiating. If we start by asking ourselves the right questions, we will be more successful when it comes to segmentation and creating differentiated value.
Now that we know how to use emotional and economical value to properly segment, we can learn more about value and pricing metrics. This blog post uses the example of paint to help explain these two key concepts.
It is now a good time to review the key terms in the glossary links provided if any of them are unclear. The terms being: emotional value, economic value, market segmentation, differentiated value, value metrics and pricing metrics. Once we have a full grasp of the concepts and terms introduced, we can finally revisit pricing design.
This blog introduces how to use value metrics as the basic material for a pricing model, which leads to designing packages targeted towards specific market segments. Following this is the three basic ways to think about pricing design and packaging.
By understanding these key concepts in pricing, we can put all the parts together and design our pricing model. Here, we have opportunity to innovate and optimize prices. Ibbaka has the expertise in market segmentation and value-based pricing with service design and design thinking. Contact us at email@example.com to discuss how we can work with you to design your pricing.