Value drivers are product or service features that improve the perception of the product or service a business is trying to sell and can help businesses grow substantially. Value drivers include technological features, brand awareness, and customer satisfaction. Value drivers are also what set a firm's product or service apart from its competitors, acting as a competitive advantage. Value drivers also give the added impression that a company's product or service is better than their competitors. Value drivers allow companies to influence their customer base to purchase their product or service. The distinctive traits that a business' product has will thus make said product look more attractive than its competitors. Once a company has figured out which value drivers boost its profits and its standing amongst competitors, it can use those value drivers to implement successful pricing increases.
That value-based pricing offers a great avenue to strong prices and significant profits is probably clear in many pricing practitioners' minds. But what is also important to remember is that a value-based pricing strategy should be data-driven: data about customers' willingness-to-pay. Data about value drivers. Data about customer segments. And not just a single global set of data, but for each market where the product or service is sold.
Launching new products or services can be a daunting task. With everything from product development, marketing, sales training, customer communication, as well setting the price. Price research can help in various ways with these challenges.
OK, so of course your product or service has a price. A price that reflects what you think is a fair price for the value you deliver to the customers(?). But do the customers see it the same way? And do you charge appropriate prices for what the customers value, or is it disjointed?
Topics: Value Proposition
We have an exciting new pricing seminar in London, UK, on December 7th, 2016. Per Sjofors, co-founder of PriceBeam, will talk about how researching customers' willingness-to-pay can improve both prices and profits dramatically.
We have an exciting new pricing seminar in Stockholm, Sweden, on December 6th, 2016. Per Sjofors, co-founder of PriceBeam will talk about how researching customers' willingness-to-pay can improve both prices and profits dramatically.
We have become conditioned to believe that whenever we buy more than one of anything we get a lower price per unit. It makes sense for the seller to increase the volume of sales to turn inventory quicker or decrease the manufacturing cost. It makes sense for the buyer as the price goes down per unit. But it does not alway have to be so.
This American tourist saw Picasso having a coffee at a Parisian cafe. She mustered strength, walked up to Picasso and said, in her high school French:
"Mr. Picasso, what a pleasure to meet. Can I please ask you to make a portrait of me? I will pay anything you want!"
Picasso took up his notepad, quickly drew a portrait and handed the drawing to the woman.
"That will be 5000 Francs, Madam." He said.
"WHAT! It only took a couple of minutes."
"No, Madam. It took a lifetime."