How Ibbaka will support pricing optimization in 2023
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
2023 will be an interesting year in the pricing and customer value space. The first half of the year will be dominated by inflation, higher interest rates and the threat of a recession. The second half of the year will depend on how deep the recession is and how we all respond. Pricing will be a big question for many companies.
Should we take a pricing action? What action should we take?
Shall we do it for all customers or selected customers?
How will this impact our customers?
What will our competitors do?
The purpose of a business is to create and keep a customer (Peter Drucker). This is done by creating, communicating, delivering and documenting value. All of these impact pricing and are impacted by it.
Price and packaging changes will need to be well planned and clearly communicated. We have helped a number of companies do this and have developed an approach that will work for many companies. See Customer segmentation for price increases and Before taking pricing action manage discounting.
Ibbaka is focused on helping our customers use the value and pricing levers to impact the key metrics that increase company value.
Grow recurring revenues (ARR and MRR)
Improve net revenue retention (NRR or NDR)
Increase Lifetime Value of a Customer
We do this in two ways, though the Ibbaka Valio Platform and through consulting services that are informed by research and data. Valio and Ibbaka pricing services work together to help B2B SaaS companies achieve their key pricing metrics.
Ibbaka Valio - Customer Value and Pricing Management Platform
Ibbaka Valio is our customer value and pricing management platform. It supports value and pricing across the customer lifecycle.
Valio has four modules.
Value Models measure in dollars the economic value your solution provides to a specific customer or well defined segment.
Value Stories present the story of how your solution delivers value. These interactive slide decks can be used in marketing and by sales to communicate value and support the business case to select your solution. Win by having a conversation on value before discussing price.
Pricing Models provide a way to quickly and consistently price a solution and manage discounts. By connecting value models and pricing models, easily calculate key metrics like
Dashboard and Analytics are where you can see how you are delivering value and capturing it in price for each customer or segment. This is where the data you need to take pricing actions and measure their impact is gathered.
Customer Lifetime Value (LTV)
Value to Customer (V2C)
Value Ratio (V2C/LTV)
Discount Ratio
Pricing Consistency
Ibbaka Pricing Optimization Services
Ibbaka Services support the implementation of Valio and the planning, execution and assessment of packaging and pricing actions.
Pricing Diagnostic
Pricing Alignment
Discounting
Value Ratio
Package Performance
Key Metrics
Market Research
Value Surveys
Conjoint Studies of Value and Willingness to Pay
Market Segmentation
Segment Targeting
Value Modeling
Value Model Development
Value Model Validation
Value Story Development
Package and Pricing Design
Modules and Value Paths
Packaging
Pricing
Bundling
Customer Migration
Segmentation
Messaging
Pricing Execution
Customer Communication
Sales Training
Pricing Adaptation
Impact Analysis and Tracking
Predictive Analytics
Packaging and Pricing Evolution
Ibbaka Pricing Research
Ibbaka Research is part of the value we provide to the larger SaaS innovation community. In 2023 our research themes will be as follows:
Impact of AI on B2B SaaS value creation
Pricing of AIs and AI based applications
Pricing of Cybersecurity solutions
Pricing of marketing technology solutions
Pricing of financial management solutions
We will be proposing general value models that can be used in these four areas and how these inform the design of pricing that is better aligned with value.
We hope that 2023 will be a good year for you and your company. We hope to work with you and if not, we hope that our research and frameworks will be useful as you plan and execute on your innovation strategies. Innovation is only sustainable if a fair part of the investment can be captured in price.