Kevin’s Corner: Value Pricing & The Customer

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October 20, 2014 by The Pricing Authority

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When it comes to value pricing, the source of value is not in what you do, but in what the customer receives. Per Sjöfors, Founder and CEO of Atenga, a global pricing and customer intelligence consulting firm, has over 25 years of executive management experience. The founder and creator of many successful and profitable sales and marketing companies in Europe and in the US, Per shares one of his favorite lessons in Pricing Performance.

“Everyone” knows that it’s important to sell value rather than price. Some consultants even go so far as to list the elements of value (the same for everyone): quality product, prompt delivery, low price, good service, a knowledgeable staff. The problem with this approach is twofold. First, if everyone is offering the same drivers, buyers will make their decision based on price. Second, it ignores the concerns that individual buyers bring to the buying decision.

People do not pay for premium products and services because of what they do. They pay for products and services in order to solve a problem or to generate a result. They make the effort to seek out a solution, or they respond to solicitations because they have a vexing concern, and need to get it resolved. There is a better pricing strategy than spinning generalizations about value, quality and good services as a “defense.”

Talking about value generally is not helpful. Many management teams pride themselves on offering “value” but far too often it is presented in too general terms.

The secret starting point is not in the focus on value as an abstraction. It’s the control of the sales process to drive focus on the customer’s problem and your ability to solve it.

To understand the real problems in value pricing, one must control the sales conversation. Ask the right questions, dig deeper, and uncover what would prompt the prospect to buy. Realize that the source of value is not in what you do (provide), but in what the customer received (perception), which is often very different.

 

Per Sjöfors is a pricing expert and sought-after speaker. He can be reached at per@atengacorp.com

 

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