Value Based Pricing has four structures:
Product structure: How value is created and perceived
Offer structure: How value is offered and accessed
Pricing structure: How value is monetized and realized
Cost structure: How value provides competitiveness and profitability.
And a pricing plan has three components: pricing structure, pricing model, pricing window.
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VALUE-BASED PRICING
Pricing | Monetization | Go-to-Market
PRICING INNOVATIONS
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2Hello. We are Pricing Innovators.
We’re a product consultancy focusing on innovations in pricing. We go beyond making monetization recommendations, and inform all
aspects of your product, offer, pricing, and cost structures as well as your go-to-market plan.
We’ve set out to reimagine the way we innovate, develop and monetize products that meet their revenue and profit goals.That’s why we
created the Pricing Canvas ™. Make sure to check out our Pricing Canvas ™ Guide on SlideShare.
Pricing & Launching
New Products
Pricing Multi-Tiered
Offers & SaaS
Changing
Monetization
Models
Changing Prices &
Pricing Structures
Monetizing
Product Lifecycle
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3
PRICING & MONETIZATON BASICS
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4
Today, more than 80% of the companies innovate and launch their new products using a “product-focused” innovation process that
fails to align the four key structures of a solution. Most new solutions fail to
• Solve for the gap in customer needs and expectations
• Capture different types of buyers’ willingness to pay
• Align their revenue structures with the benefits received by the different types of buyers
• Execute a market play with a competitive and profitable cost structure.
Product-focused Innovation
Product Cost Price Value Customer
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5
”Value-focused” innovation and monetization process
not only helps you develop the products that people
will actually buy but also align your product, offer,
pricing, and cost structures with the true dynamics of
your buyers, users, and market.
Value-focused Innovation
Go-to-Market
Test & Plan
Cost & Product
Structure
Value Metric
& Pricing
Value
Stack
Value
Gap
Analytics
& Metrics
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VALUE
=
Willingness to Pay – Opportunity Cost
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“Value” is a quantitative notion, not a creative
or qualitative one, and if nobody pays for it,
no value is created. And this is hard to
swallow for product owners. Product owners
usually overestimate the value of a solution
since they have the most complete vision
and the value is delivered as a whole.
However, most customers’ willingness to pay is
driven by some key parts rather than the whole
which are called non-compensatory and
compensatory features. For buyers, value has many
different forms: economic, financial, emotional,
social, perceived, relative, reference, floor,
differentiated, tangible, intangible, psychological, etc.
Product Owners Buyers
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STRUCTURAL DRIVERS OF VALUE
Product structure: How value is created and perceived
Offer structure: How value is offered and accessed
Pricing structure: How value is monetized and realized
Cost structure: How value provides competitiveness and
profitability
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Value Stack
Value
Gap
Value
Innovation
Value
Metric
Product
structure
Cost
structure
Offer
structure
Pricing
structure
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11STRUCTURAL FOCUS BY PRODUCT LIFESTAGE
Optimize for new &
pre-revenue products
Drives acquisition,
monetization & top-
line growth metrics
Optimize for existing
products & product
lines
Drives profitability,
retention, & bottom-
line growth metrics
Offer
Structure
Product
Structure
Cost
Structure
Pricing
Structure
Offer
Structure
Product
Structure
Cost
Structure
Pricing
Structure
Offer
Structure
Product
Structure
Cost
Structure
Pricing
Structure
Offer
Structure
Product
Structure
Cost
Structure
Pricing
Structure
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THE GOLDEN RULE OF PRICING
Develop offerings that people will acquire, for a
price commensurate with the benefit delivered, at a
cost structure more favorable than the competition.
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13Pricing is not about “prices”
Getting pricing right means identifying the pricing structure, pricing model, and pricing window, that drives acquisition, monetization,
and profit growth - all at once.That is what it takes to make it in the market.
ACQUIRE MONETIZE GROW
The right pricing structure
aligns your offering with the
value stacks of different types
of buyers, and drive
acquisition.
The right pricing model
allows you to monetize your
product features and
attributes in ways that their
benefits are realized by your
buyers.
You can increase your
customers’ lifetime value as
they continue to realize the
offer’s benefits. Customers
pay more, as they receive
more value.
PRICING
STRUCTURE
PRICING
MODEL
PRICING
WINDOW
Align your product structure
with your different buyer types
Align your profit model with
how different buyers benefit
differently
Align the value you deliver with
your buyers’ willingness to pay
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Price
Best for
Benefit #1
Benefit #2
Benefit #3
Benefit #4
Benefit #5
Price
Best for
Tier #3
CTA
Benefit #11
Benefits #12
Benefit #13
CTA
Price
Best for
Tier #1
Benefit #6
Benefit #7
Benefit #8
Benefit #9
Benefit #10
CTA
Pricing structure 14
Align your pricing structures with the ways in which different buyers need, buy, utilize, and benefit from the benefits differently. In the
case that you have 10, 20 different types of buyers, perform a frequency distribution to identify the top 3-4 which address more than 60%
of your market. And remember: people don’t buy features; they buy benefits.You must translate the features and attributes into
benefit statements.
Tier #1
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Basic Plus Team Enterprise
Get hands-on experience with the
innovative solution
Realize benefits commensurate
with the price
Upgrade for achieving more of the
same benefits
Upgrade for achieving new benefits
Upgrade for achieving even more
benefits
Upgrade for benefiting in a different
way
Upgrade for benefiting in a different
scale
15
Pricing model
Align the value delivered with the various pricing windows. Determine whether or not you can create multiple tiers or plans and how you
will mobilize buyers from lower priced tiers to higher priced tiers. Instill fences, caps, and triggers to influence the buying behavior.
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Positive
Differentiation
Reference Point
Negative
Differentiation
Pricing Window
Reference
Value
Economical
Value
Floor
Value
Relevant
Costs
Pricing window
Align your pricing window with the benefits realized. Quantify the reference value, differentiated value, floor value, and economical
value, and deduct a pricing window for each of the pricing plans.
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Pricing New Products We’ve helped an ed-tech SaaS company to identify a brand-new segment, reconfigure its product and pricing
structures, and adjust its go-to-market plan which created an additional $1.5M annual revenue potential.
Pricing Multi-Tiered
Offers & SaaS
We’ve helped a medical technology company to productize a new digital service for its 3,000+ customer base and
align its pricing plan with the customers’ revenue upside creating an additional $3.2M annual revenue potential
and 15% improvement in customer retention.
Changing Monetization
Models
In healthcare, the biggest question is “Who pays?” We are cracking at that question everyday. We’ve helped a
healthcare delivery technology company to set up new partnership models with hospitals and get their pricing
structures right which expanded their addressable market by 420%.
Changing Prices & Pricing
Structures
Our client – a prominent design agency – had continued adding new features and improvements on their
technology product for over five years without any pricing adjustments.We helped them restructure their
offering and roll out a new pricing plan.The new plan had no impact on their existing churn rates while creating
an average 17% increase in their annual profits.
Monetizing Product
Lifecycle
We’ve helped a financial technology company to price their future product roadmap and align their cost
structure with alternative sales and revenue models.The realignment enabled a 12% more favorable cost
structure than initially planned and opened up three new industry verticals.
Pricing can drive revenue and profits in new and different ways
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Rapid Pricing Assessment
$ per day
PRICING
DATA ANALYSIS
PRICING WORKSHOP
PRICING PLAN
Monetization-as-a-Service
$$$ per month
GROWTH
Learn moreLearn more
6-12 Weeks Team Coaching
$$ per week
PRODUCT
Learn more
We walk the talk: here’s our own pricing structure 18
What we deliver
An opportunity analysis and
pricing plan using the principles of
the Pricing Canvas (TM).
What we deliver
A strategic, competitive, value-
based pricing strategy, pricing
structure, and go-to-market plan.
What we deliver
A comprehensive monetization
plan for your portfolio, and
systematic adjustment of pricing
and roadmap.
DATA CAMPAIGNS
10-D ALIGNMENT
GO-TO-MARKET PLAN
MONETIZATON
MOBILIZATION
ONGOING MONITORING
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Schedule a Rapid Pricing Assessment today
✉ info@pricinginnovations.com 📞 +1-(612) 351-2503 @pricingpros
What new revenue and profit opportunities can pricing
innovations create for you?
Let’s find out!
Book a Rapid Pricing Assessment Today!
Editor's Notes
So in microeconomic terms value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value innovation lies in creating the differentiated products and services that maximize customers’ willingness to pay and minimize their opportunity costs. And again, in microeconomic terms, value isn’t being created unless you can monetize it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This one is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Believe me, I’ve been in all those positions and it was like people were asking me to kill my baby, it’s hard it just is. To make it in the market, what people are willing to pay for and how much matters more than anything else.
So in microeconomic terms value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value innovation lies in creating the differentiated products and services that maximize customers’ willingness to pay and minimize their opportunity costs. And again, in microeconomic terms, value isn’t being created unless you can monetize it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This one is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Believe me, I’ve been in all those positions and it was like people were asking me to kill my baby, it’s hard it just is. To make it in the market, what people are willing to pay for and how much matters more than anything else.
So in microeconomic terms value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value innovation lies in creating the differentiated products and services that maximize customers’ willingness to pay and minimize their opportunity costs. And again, in microeconomic terms, value isn’t being created unless you can monetize it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This one is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Believe me, I’ve been in all those positions and it was like people were asking me to kill my baby, it’s hard it just is. To make it in the market, what people are willing to pay for and how much matters more than anything else.
So in microeconomic terms value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value innovation lies in creating the differentiated products and services that maximize customers’ willingness to pay and minimize their opportunity costs. And again, in microeconomic terms, value isn’t being created unless you can monetize it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This one is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Believe me, I’ve been in all those positions and it was like people were asking me to kill my baby, it’s hard it just is. To make it in the market, what people are willing to pay for and how much matters more than anything else.
So we said, what if we put the value equation to the center, how can we influence these structural failures? And we came up with a value-focused innovation process which we believe addresses some of these structural issues we mentioned and enables you to get to a minimally viable business and beyond. That’s what we’ll talk about the rest of our time today.
So in microeconomic terms value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value innovation lies in creating the differentiated products and services that maximize customers’ willingness to pay and minimize their opportunity costs. And again, in microeconomic terms, value isn’t being created unless you can monetize it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This one is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Believe me, I’ve been in all those positions and it was like people were asking me to kill my baby, it’s hard it just is. To make it in the market, what people are willing to pay for and how much matters more than anything else.