The value cycle defines how organizations create, communicate, deliver, document and capture value. It is generally used by companies to align different business functions around how they create value for customers. The value cycle turns around a deep understanding of how value is created for customers.

Lifetime Value of a Customer (LTV / CLV) is the total worth of a customer's business over the whole period of their relationship. It costs less to keep existing customers than to acquire new ones, so increasing the value of existing customers is a great way to propel growth.

EVE, or Economic Value Estimation, quantifies the monetary value created by an offering for a particular customer versus their next best alternative. Since value is at the center of pricing strategy, modeling economic value estimation becomes critical in value-based pricing.

Usage-Based Pricing uses a measure of usage as a pricing metric. It is often combined with other pricing metrics to create a hybrid pricing model. Research has found that companies who include a usage-based metric grow faster. A well designed usage-based pricing metric connects price to value.

The Value Path is a powerful metaphor that brings together processes, performance, business outputs, and organizational goals to focus on value creation. The value path is a series of steps that results in value for the customer or end-user.

Willingness to pay (WTP) is a popular term in pricing, but it should not be used when designing pricing. It is an outcome of good value-based pricing work and not something that can be optimized directly. Pricing experts who claim to optimize for WTP are leading their customers astray.

Service-Led Growth (SLG) is a compelling growth model with a well defined growth flywheel. It is most relevant when introducing solutions to complex problems where a deep understanding of how the problem and solution fit together is important. Please join the Service-Led Growth group on LinkedIn.

For pricing to be effective, it should track the value metric. The value metric is the unit by which the product or service offering is consumed that best reflects how the customer gets value.

Bundling is when companies and organizations group together multiple products and services to be sold and managed together. Bundles are meant to make it easier for customers to buy complementary goods and services. They make it clear what goods and services belong together. If packages are product management’s concern, then bundles are generally managed by marketing.

A pricing metric is the unit of consumption for which the buyer pays. An example of a pricing metric is dollars per litre for purchasing fuel. Choosing a pricing metric is one of the most important steps in designing value-based pricing.

Core Concept: Tiered Pricing Architecture, also known as a GBB or Good Better Best Architecture. Why is this pattern so popular? How do you design for it? What are the different approaches?

Core Concept: Conjoint and Discrete Choice Modelling are important tools for market research. In the context of pricing work, these studies can give insight into how different functions contribute to value. This is very useful in packaging and understanding how prices should be priced relative to each other.