Willingness to pay is very sensitive to framing effects. One of the most important framing effects is the pricing metric. B2B SaaS companies can realize orders of magnitude changes in willingness to pay by changing their pricing metric. Pricing metrics can also be a powerful way to differentiate.
We see a lot of market segmentations in our work. Often these segmentations are the weakest part of the marketing plan. Many segmentations are limited to firmographic data and in some cases are simply a list of industry verticals. They are meant to find a market that fits the offer. Instead, we should segment based on emotional and economic value creation to build an offer that fits a market.
There is wide agreement that differentiation is critical to effective pricing, but what is differentiation and how do you create it? Enhance an existing value driver. Create a new value driver. Find a new market for your existing or new value drivers. In this post we look at the three basic ways you can develop differentiation for your offer and what these imply for your product and pricing strategy.