Holden Advisors Blog

I was speaking with the VP of Pricing Transformation for a Fortune 500 company recently and, as disciples of value-based pricing, we debated the subtleties of modern-day pricing theory. We agreed that a shift to value-based pricing within an organization should achieve the following:

Customers buy your products for a reason—namely, the impact your products have on their business results. If they could get the same results without buying your solution, believe me, they would. They would gladly refocus their time and money on running their business.  

I recently spoke with a major supplier to semiconductor manufacturers. The semiconductor industry has a handful of global players owning 80% of the market. Predictably, the supplier’s business model is heavily reliant on a few large customers. Because of this reliance, the supplier’s marketing team is well-schooled in measuring value delivered to customers. They knew critical semiconductor KPIs like cost of ownership, yield, performance, and risk. Their value analyses align with improving performance in these key areas. The value toolset is impressive – I had never seen such models and spreadsheets that calculated value so completely.

(Part 3 of 3)

Nothing beats the smell of a real Christmas tree. Every year on the weekend following Thanksgiving, my wife and I head to the local pop-up seller where tree farmers from up north display their wares of Balsam, Frasers, and Douglas Firs. We evaluate each tree based on size, ability to hold ornaments, the shape, propensity for needle drop, etc. and select a full tree carefully measured to be one inch lower than our ceiling.

‘Tis the season for car commercials and countdowns.  I will spare you the sentimentality of the great American holiday car spots.  Instead, I bring you a bit of fun to close out this holiday season.  We’ve had a super year working on really complex and challenging pricing issues, discovering hidden value for clients, and working with sales people to protect that value in negotiations.  Some of those same consultants are also talented (and competitive) writers who enjoy sharing insights with our followers.  Let’s see who scored the most page views on their blogs.

In recent years, the word value has become almost meaningless. This watered-down version of value frustrates anyone striving to improve sales effectiveness and overall business results. We know customers want value. But, what does that mean exactly?

Do you deliver value that is not captured in price? Do you provide services that are under-appreciated by your customers? If you answered “yes,” you have lots of good company. We constantly see organizations miss the potential to capture value because of misaligned price metrics, offering extra services above and beyond contract agreements, all you can eat offerings, and poor tracking of value delivered.

Does your sales team spend more time negotiating with you than with the customer? Do they struggle to achieve pricing targets? How well-equipped are they to accomplish the objectives they are given?

Last week, Netflix announced a $1-$2 monthly price increase for its standard and premium plans. Investors applauded the move, with shares lifting 5.4%[1] on October 6^th, adding over $4B to Netflix’ market cap. How many other executives are now evaluating their pricing decisions in search of incremental revenue? Should you?