The value ratio is a critical but frequently overlooked pricing metric. Tracing this metric is critical to your long-term health. Deciding what level to target is one of the most important Where to Play choices you make in pricing.

A lot of data is generated across the customer journey. Innovations platforms, product development applications, marketing automation, sales management (CRM), configure price quote (CPQ), project management, customer service platforms, customer success … Where is the data from all of these applications gathered and put in the context of value? This is the direction we are taking the Value Pricing Dashboard. It will be the integration point for all of the data about value to the customer (V2C).

At Ibbaka, we often come across organizations who struggle to support their sales team in their value-based selling endeavours. Sales teams often find it difficult to defend pricing and communicate the differentiated value of the offer.
With that in mind, we developed The Ibbaka Value Pricing Dashboard which is a software as a service (SaaS) application that connects value to price, and helps organizations quantify and demonstrate the value that they deliver to their customers.

Product Led Growth (PLG) has proven to be a very successful business and investment strategy and has delivered some spectacular results. But is doesn’t work for every company and even the best product led growth companies will find that they need to adapt as their markets mature. But every company can learn from product led growth and needs to adopt the most powerful tactics into their own approach.

Value based pricing requires a formal value model. If you do not have value models that quantify value drivers and connect them together you are just pretending to do value based pricing. Good value models are three dimensional they include economic, emotional and community value drivers. They become real when they are validated in conversations with customers.

Pricing and value communication is central to good price management. When and how price is introduced into the customer conversation has a big impact on price acceptance. The customer journey map provides a guide to how to plan these conversations. Layering pricing and value into the customer journey is a best practice.

In most companies value and pricing are disconnected. Even worse, value promises and value delivery are not well documented. The result is lower sales, more discounting and churn. The Ibbaka Value Pricing Dashboard connects pricing to value across the customer journey. It gathers the data you need to effectively evolve pricing.

Usage-based pricing has emerged as a critical component in pricing design. Important in its own right, it is also a step on the path to the Holy Grail of pricing - outcomes based pricing. Success requires new skills around prediction, value paths and customer success.

When sales comes to you asking for discounts or demanding price cuts do not blame them. Ask yourself, have you helped them communicate value and then document the value delivered? Value-based pricing begins with value, not pricing. If you want your sales team to execute on a value based strategy you need to support them.

Too many companies negotiate a price during the sales process and then forget about it. This is a recipe for failure. Pricing and value are closely connected. The pricing-value conversation continues across the customer journey. Keeping this conversation current is how to drive renewal, cross sales and upselling.

Service-led growth is driven by a positive feedback cycle. This cycle has a lot in common with the cycle that leads us to form good (and bad) habits. A concept blend of service-led growth and the habit cycle gives new insights into how to make service-led growth work.

In early May 2021 Karen Chiang and Steven Forth gave a two day workshop on applications of the strategic choice cascade to pricing. The case study featured a choice on data monetization for a precision agriculture company. Different winning aspirations led to very different pricing strategies.

Ibbaka is a highly collaborative company. We work to build a community of people and organizations committed to creating and delivering value, whether that be economic, emotional or pricing. Some of our work is on pricing. Some is more focussed on innovation. In all cases we are looking to help people develop their skills. One way we do this is through our collaborations with the venture capital firms Arthur Ventures and OpenView Venture Partners.

Nir Eyal’s Hook model of how to build habit forming software solutions can also be applied to service led growth. The goal of service led growth is to internalize the the triggers that lead to actions, make the rewards more predictable, and to build up data and shared skills to generate the insights that will act as triggers for additional engagements.

The worst pricing decisions are random pricing decisions that stick and become frozen accidents.

The final choice in the strategic choice cascade is the systems you will need around the value cycle. As you design the systems that support your pricing strategy, take a holistic approach to the systems you will need to enable success.

Usage-based pricing is a best practice and a key step towards outcomes-based pricing. This sounds good, but what usage? Should any click be used for the usage metric that becomes part of the pricing model? Value paths are are a sequence of actions that lead to value. They are different from but related to value streams. Identifying value paths and then making them part of your pricing model is the key to usage-based pricing.

Stephan Liozu has been a driving force in the pricing community for more than a decade. He is currently the Chief Value Officer (CVO) at the multinational engineering company Thales, where he is defining what it means to be a CVO. Stephan is also a prolific author and educator in the world of pricing and has been leading research into areas like data monetization, pricing for the Industrial Internet of Things and the ethics of pricing AIs.

Just because you have professional services and software subscriptions and data does NOT mean you are driving a service led growth model. You have service led growth when services predict subscriptions and subscriptions predict revenue. Prediction is key. To really get the crank turning, data is also monetized and the platform is constantly reducing the cost of service delivery while increasing its value.

Usage-based pricing puts new requirements on the systems we use to manage pricing and billing. LogeSense was designed for usage-based pricing and to support hybrid pricing models. We spoke with CEO Adam Howatson to understand where a leading vendor sees usage-based pricing going.