Three of the most important pricing questions are ‘What to price?’ ‘What to optimize?’ ‘How to optimize?’ Pricing experts have gravitated to how to optimize, but it is important to answer the other two questions first. Begin with what to price.

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.

One can learn a lot by comparing pricing pages. Here we look at Thinkific and Kajabi to see what we can infer from the pricing curves in their tiered pricing architectures (sometimes referred to as GBB or Good Better Best pricing).

Deciding to change your pricing can be the easy part. Once you have decided on the change you need a way to communicate the change, lead your customers over into the new model, manage dissent, and make sure everyone is getting the value designed into the model.

You have developed some exciting new functionality, and want to factor this value into your pricing. How will you do that? Once you have adjusted packaging and pricing, will you check to make sure that customers are using the software in a way that delivers the value?

OpenView Venture Partners lives up to the promise of being a value-added investor and is a thought leader in areas like product-led growth and usage-based pricing. Each year, Ibbaka and OpenView publish our thoughts on pricing transformations for the coming year.

Value-based pricing and customer success are coming together into a new discipline customer value management. Prepare yourself for this transition with Ibbaka’s new course on pricing and customer value management. Sign up for updates on this course and to help us shape the approach.

Pricing strategy and tactics change as software categories go through major transitions. These transitions can play out across the technology adoption cycle, be part of major changes (like the shift to SaaS) or part of the normal commoditization that all successful categories go through. The Digital Asset Management (DAM) category is currently going through the commoditization phase. This is what will happen.

What questions should you be asking about your pricing as we begin 2022? The potential impact of inflation is one. Higher interest rates are another. How will you use pricing to increase the value of your company?

There are many ways for an organization to grow and many possible growth strategies to adopt. One can take a sales-led growth, or product-led growth, or service-led growth approach. Growth can come from existing offers or new offers. It can be organic or come from acquisitions. One can grow in an existing market or enter new markets. What is your growth strategy for 2022? Please take the survey. The results will be shared in March 2022.

In his excellent new book, Pricing for Growth (Jeff Robinson), asks us to adopt a growth mindset for pricing. A growth mindset (as opposed to a fixed mindset) assumes we are operating in a world full of opportunities that learning is central to execution. Will you adopt a growth mindset for pricing in 2022?

Fashioning a business with value at the center requires a commitment to ongoing value creation for customer stakeholders. In depth understanding of how value is created for the customer is foundational to designing fair and effective value-based pricing. It also creates positive customer experiences across the customer lifecycle. Customer value management is an emerging business practice that manages value to customer (V2C) across the full customer journey.

David Lovejoy has joined Ibbaka in customer success for our pricing and customer value management work. Here he gives his first ideas on the importance of value and customer value management. He also shares his skill profile, which will grow over the coming months as he gains experience.

How do you know if you are executing on a service-led growth model? Like any business model having a clear set of metrics that you are tracking and planning to is critical. For service-led growth, the metrics need to capture both sides of the service-led growth flywheel and the interactions. The best overall metric is net aggregate customer lifetime value.

The power of customer journey mapping is well understood in the service design world. Ibbaka has introduced swimlanes for value and price into the customer journey. It is important to remember that the customer journey is not a given, it is designed. Value mapping is the key tool to design the customer journey experience.

Choosing a pricing metric is the most important pricing decision you will make. It is what frames all of your pricing decisions. The pricing metric should track the value metric so that you can frame your pricing in terms of the value you deliver. Here is a simple process to help you choose your pricing metric.

Pricing challenges come in all shapes and sizes. In some cases, the pricing challenge is a symptom of some other underlying issue, not something that can be solved with a quick pricing fix. Understand the five major types of pricing challenges. Then use the Ibbaka Pricing Diagnostic to answer some questions on the type of pricing challenge that you have. Ibbaka will respond with a preliminary diagnosis.

Prices cannot be left static. Differentiation value changes as your customers change their own business and as new competitive alternatives enter the market. There are several different reasons to reconsider your pricing. Explore these with the Ibbaka Pricing Diagnostic.