Driving Profits with Value-Based Pricing
Posted by Jamie Rapperport on Thu, Dec 23, 2010 @ 01:25 PM
Last week, I tuned into Vendavo’s webinar, “Driving Profits with Value-based Pricing in B2B Companies - Operationalizing Value-based Pricing,” presented by Elliott Yama, through the Professional Pricing Society.
Elliott, Director of Education at Vendavo, had a number of useful take-aways for pricing practitioners looking to drive pricing performance with a value-based approach to pricing.
Four points I thought to be note-worthy:
1. Vendavo positions the pricing waterfall as the organizing framework for price construction, price execution, and measuring and managing pricing performance. As Elliott said, “the price waterfall provides a cross-section view into pricing strategy and its execution.”
2. An attribute-based approach to price construction is most valuable because "value", in the customer’s eyes, is characterized by “attributes” of an offering. Economic value associated with an attribute is added to a base price, or reference price, in price construction. This systematic approach is critical for leveraging the insights most Marketing, Sales, and Support organizations have about their customers. Furthermore, the attribute-based approach establishes consistency in price construction, which is key for effective pricing operations.
3. Segmentation is a must for a “scientific” approach to pricing. Pattern recognition and centralized pricing control are mandatory to manage margin yield on your customer portfolio.
4. Pricing managers should be focused on objective setting and systematic feedback loops in order to drive sustained performance.
If you missed out on the live webinar, you still have the chance to take advantage of valuable pricing insight. Click here to request the OnDemand webinar.