Pricing strategy is critical to commercial excellence. Without a pricing strategy pricing drifts into throw it at the wall pricing and becomes a frozen accident. What are the key aspects of pricing strategy? This post gives you a concrete introduction. It is a great place to get started.

Why Use Value-based pricing? Pricing can be extremely complex to many as it is a nuanced art but also a strange science. There are many different pricing models and strategies to choose from. It's hard to know where to even start. If your product has differentiated offers and you want the most flexible model that can support different pricing strategies, value-based pricing is for you. Pricing models might seem complicated but here we break down the structure to show the basics of value-based pricing.

Willingness to pay (WTP) is one of the most frequently abused concepts in pricing. Many people try to use it as a proxy for value. It is not. Other companies claim they can estimate willingness to pay through surveys. This is too simplistic. Why?

Willingness to pay is determined by framing and by the value delivered to the customer relative to the alternative. To measure willingness to pay without taking these into account is wasting an opportunity to really understand your customers and position the value you are providing.

Join the Ibbaka team on Thursday March 21 for two pricing case studies. One looks at Economic Value Estimation in precision agriculture. The other looks at vectors of innovation and pricing in media (the subject being the iconic British financial newspaper The Financial Times). This is part of the Value Innovation and Pricing Vancouver series of MeetUps.

There are many ways to innovate on your pricing metric to get a closer correlation with your value metrics and business model. Heathrow Airport provides an interesting case study. Note how they use different pricing metrics for inbound and outbound flights!

User-based pricing has gotten a lot of bad press recently. It is generally seen as a lazy pricing metric, used by companies that have not thought deeply about their value metric and how to connect the pricing to value. But there are many cases when user-based pricing is the best metric and should be used.

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.