Customer centricity as defined by Peter Fader is emerging as a strong alternative to product led strategies. To win with this strategy you need to pay close attention to customer segmentation and then price with an eye on the value you create for your best customers.
Good market segmentation brings together customers that buy the same way and get value from a product or service offering the same way. It ensures optimized use of an organization’s resources through targeting customer segments who derive value from the offering in a way that is in alignment with the organization’s objectives of maximizing revenue, profit or margin at a reasonable cost to serve. Market segmentation is the foundation of value-based pricing. In value-based pricing the goal is to capture a fair share of the differentiated value of an offering relative to the customer’s next best competitive alternative.
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).
Tom Tunguz is one of the best informed and prolific of the venture capitalist bloggers. His blog is generally well researched and thoughtful. Worthy to be on your read regularly list. On May 9, 2017, he published a piece titled "The Challenge of Performance Pricing for SaaS Companies." This time, I think he got it wrong.