Value Based Pricing Should Never Equate With Expensive Pricing

Dr. Jim Anderson authors the blog, The Accidental Project Manager. I read Dr. Anderson’s post, “Confessions of a Product Killer” with interest. After all, Dr. Anderson communicated in simple phrases some foundation-level principles of product marketing, principally that overlapping products rarely make sense (though they do make sense for a multi channel marketing strategy with OEMs and manufacturers selling the same products into competitive markets) and that much less sense where pricing will work to the detriment of a business.

I would like to clarify, however, that when Dr. Anderson alludes to value pricing for products, in a marketing context as “expensive”, I see a meaningful opportunity to differentiate my view from his own. I do not see value pricing for products as a process that renders a marketing message “expensive.” In fact, and further, if the pricing appears to be “expensive” then the marketing team has not done its homework to demonstrate to the public just why a comparatively higher price is, in fact, a substantial bargain versus actual costs that would otherwise be incurred to get the same job done via existing resources or, better yet, competitive products.

Certainly it takes a substantial amount of work to determine the hard dollars and cents savings to be realized through the purchase of a product versus continuing with status quo business operations. For example, one needs to collaborate with prospects and customers to unearth the real specific costs incurred to perform the activities that will be enhanced by a new product. Further, one needs to be open to the possibility that these savings will vary from customer to customer and, thereby, opt for a complex selling strategy with, perhaps, different pricing for different applications.

Nevertheless, value based pricing, as a feature of product marketing, should never result in an “expensive” price as perceived by the market. Certainly, the price might be out of the reach of prospects who cannot afford to capture value from their purchase, but the price should be compelling and inescapable for the right market segment.

I specialize in this type of work. I actively pursue opportunities where I can help customers realize substantial value through saving precious funds that would otherwise be expended on inappropriate and ineffective product pricing methods. Please call me, Ira Michael Blonder, IMB Enterprises, Inc at +1 631-673-2929 to further a discussion about why value pricing makes the most sense for your IT product marketing efforts.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved

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