SlideShare a Scribd company logo
1 of 45
Introduction to Value-led Pricing
Ed Kless
@edkless
What is a Business Model?
How your firm creates
value for and captures
value from customers.
@edkless
“Disruptive threats
come inherently
not from new
technology but
from new business
models.”
- Andy Grove, Founder, Intel
A Tale of Two Theories (Business Models)
Revenue = People capacity + Efficiency + Cost-plus pricing
Current Model: Professional Service Firm
New Model: Professional Knowledge Firm
Profit = Intellectual capital + Effectiveness + Value-led pricing
↑ ↑ ↑ ↑
@edkless
Four Assertions
1) Growth without profit is perilous
2) Nonrival assets have more leverage than rival assets
3) Effectiveness is always and everywhere more important than
efficiency
4) Value-led pricing is superior to cost-plus pricing for capturing value
created by PKFs
@edkless
Rival Asset
Non-Rival Asset
@edkless
From Revenue
to Profit
@edkless
@edkless
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Cost
Price
Value
@edkless
From Capacity
to Capital
@edkless
Four Forms of Capital
• Financial
• Intellectual
• Structural
• Social
@edkless
From Efficiency
to Effectiveness
@edkless
The Antithesis of Efficiency
• This session
• All continuing education
• Knowledge management
• Total quality service
• Mentoring and coaching
• Networking
• Business development
• Social media
• Innovation
• Pricing on purpose
@edkless
From Cost-plus to
Value-led pricing
@edkless
@edkless
Two Basic Pricing Methods
Cost-led pricing
Product  Cost  Price  Value  Customer
Value-led pricing
Customer  Value  Price  Cost  Product
@edkless
Unlearn
• What you do (or have to offer) has intrinsic value
• Business exchanges are like for like
• Price is primarily a function of cost
Remember
• Intent counts more than technique
• NO GUESSING! (Move off the solution)
• Slow down for yellow lights
Three things to unlearn & Three things to remember
@edkless
1. Listen
2. Assuage
3. Move
4. Close
The four steps to move off the solution
@edkless
I need to replace QuickBooks for my
growing firm in need of a more flexible
accounting solution. Is that something
you guys can do?
We can. Companies that out have
outgrown QuickBooks are right in our
sweet spot. Would it be OK if I asked
you about what a more flexible
accounting solution means in your
specific context?
Clarify – Example 1
@edkless
Clarify – Example 2
I’d be glad to offer my thoughts. Help
me out. When you say you want to
improve your financial reports internally
and externally, can I ask what that
means?
We want to implement a more effective
accounting system to improve our
financial reports internally and externally
with customers. Can you give me a
demo of Sage Pastel?
@edkless
Clarify – Example 3
The first thing that I’ll say about my
experience is that everyone who asks
for integrations with Sage Live has
something slightly different in mind.
Would it be okay if we talked a little
about why you want to integrate so I can
make my comments more relevant?
I’m looking to purchase a new finance
system that includes purchase order
requisition and a personnel system that
will integrate with our clocking-in
system, and allows for the digital import
of invoices with OCR. What options are
available to connect to our systems to
Sage Live?
@edkless
Presumptive Clarify – Example 1
I’ll be happy to give you price once I
understand exactly what you want to
accomplish and at this point it would be
presumptive of me to guess. Would you
mind giving me some details about what
you are hoping a new Sage Intacct-
based system would do for you?
I am looking for information about Sage
Pastel, but I’ll be honest our main
concern is price. Please tell me how
much you would charge.
@edkless
Presumptive Clarify – Example 2
Fair enough, Cloud is a hot topic right
now. However, it would be presumptive
of me at this point to offer my opinion
since Cloud environments have different
definitions. Could you give me yours?
Our new IT director feels there are
advantages to moving to a Cloud-based
environment. I would like your opinion.
@edkless
Bonus Content: Marston’s Circle of Scope
@edkless
Yellow Light – Example 1
I have a concern. If we have no
evidence or sense of impact of the
problem, is it possible that somebody,
somewhere is going to seriously
question the validity of this project?
The customer is pushing to move ahead
with developing a solution to solve the
problem without identifying the evidence
of its existence and impact on the
organization.
@edkless
Yellow Light – Example 2
I have a concern. It seems the cost of a
solution may be larger than the problem
itself and it makes little sense to
continue moving ahead. Am I missing
something?
You believe the cost of the solution your
customer is asking for is larger than the
cost of the problem it is intended to
solve.
@edkless
Yellow Light – Example 3
I have a concern. I don’t know if your
CFO is like our CFO. However, at our
company, even if everyone thinks there
is a problem, there needs to be a
business case backing up the request
before he will allocate money. Could
that be a possibility here?
Your customer does not want to take the
time to develop a business case for the
solution because, “everyone knows it is
a problem.”
@edkless
The Five Golden Questions – Getting to Value
Recognize a “measurable” word
• Revenue
• Cost
• Customer satisfaction
• Quality
• Performance
• Productivity
• Et al.
Ask Mahan Khalsa’s Five “Golden
Questions”
• How do you measure it?
• What is it now?
• What do you want it to be?
• What is the value of the difference?
• Over time (usually one year)?
@edkless
A 1% Improvement in:
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
- Fixed Costs + Revenue - Variable costs + Price
2.7%
3.7%
7.3%
11.0%
1.5%
2.5%
4.6%
7.1%
McKinsey AT Kearny
@edkless
“The single most important
decision in evaluating a
business is pricing power. If
you’ve got the power to raise
prices without losing
business to a competitor,
you’ve got a very good
business. And if you have to
have a prayer session before
raising the price by 10
percent, then you’ve got a
terrible business.”
-Warren Buffet
@edkless
@edkless
Presuppositions
• Defined value
• Completed a scope or at least an agreed upon set of
objectives:
• Deploy…
• Educate…
• Provide…
• Convert…
• Develop…
• Integrate…
@edkless
Van Westendorp’s Model
• At what price would this customer
think this is too expensive and not
buy it?
• At what price would this customer
think this is expensive, but most
likely buy it?
• At what price would this customer
think this is cheap, but still likely to
buy it?
• At what price would this customer
think this is too cheap and not buy
it?
@edkless
Dan Ariely – The Economist sets price
@edkless
The Numbers
Two options Three options
Selected Price Revenue Selected Price Revenue
One year, web only 68 59 4,012 16 59 944
One year, print only - - - - 125 -
One year, print and web 32 125 4,000 84 125 10,500
Total Revenue 8,012 11,444 43%
Production costs 32 30 960 84 30 2,520
Profit 7,052 8,924 27%
@edkless
@edkless
Seven Ts to Offering Choices
1) Terms
2) Timing
3) Technology
4) Talent
5) Tailoring
6) Transference
7) Travel
@edkless
Create choices
C
•B+
•Convert…
•Integrate…
B
•A+
•Provide…
•Develop…
A •Deploy…
•Educate…
@edkless
The Baron Joseph von Neinbach Model
WA HF PF
C
B
A
@edkless
Questions to ask before setting price
• What does the customer think the value of our solution is?
• Have we done a complete scope document/project plan?
• With whom on organization chart am I dealing?
• Who referred this customer to us? Why were we referred in the first place?
• Do they have any time sensitive deadlines for the completion of this project? Why do they need to do it now and not in six
months?
• Who’s paying for this? Are they spending other people’s money?
• Do we have any competitors? If so, who? What price information do we have about these competitors? What is the price of
the next best alternative offering?
• How profitable is customer’s company? How long have they been in business?
• How busy are your resources?
• Have they engaged with someone else prior to us to do similar work? Who was prior firm and why are they changing?
• How sophisticated is the customer?
• Does customer add to firm’s skills or markets?
• Do we like this customer? What is the state of their restroom?
• How do we help reduce the customer’s risk?
@edkless
The Proposal
Item $
V
•G+
•Convert…
•Integrate…
G
•T+
•Provide…
•Develop…
T •Deploy…
•Educate…
@edkless
http://thesoulofenterprise.com
Thank you!

More Related Content

What's hot

7 Dimensions of Agile Analytics by Ken Collier
7 Dimensions of Agile Analytics by Ken Collier 7 Dimensions of Agile Analytics by Ken Collier
7 Dimensions of Agile Analytics by Ken Collier
Thoughtworks
 
Business Transformation Proposal Powerpoint Presentation Slides
Business Transformation Proposal Powerpoint Presentation SlidesBusiness Transformation Proposal Powerpoint Presentation Slides
Business Transformation Proposal Powerpoint Presentation Slides
SlideTeam
 
IPDcasestudy_Brookfield-1
IPDcasestudy_Brookfield-1IPDcasestudy_Brookfield-1
IPDcasestudy_Brookfield-1
Mike Ulmer
 
Business Partnership Proposal Powerpoint Presentation Slides
Business Partnership Proposal Powerpoint Presentation SlidesBusiness Partnership Proposal Powerpoint Presentation Slides
Business Partnership Proposal Powerpoint Presentation Slides
SlideTeam
 

What's hot (20)

How to successfully implement change and innovation
How to successfully implement change and innovationHow to successfully implement change and innovation
How to successfully implement change and innovation
 
Koa engr 245 lean launchpad stanford 2020
Koa engr 245 lean launchpad stanford 2020Koa engr 245 lean launchpad stanford 2020
Koa engr 245 lean launchpad stanford 2020
 
7 Dimensions of Agile Analytics by Ken Collier
7 Dimensions of Agile Analytics by Ken Collier 7 Dimensions of Agile Analytics by Ken Collier
7 Dimensions of Agile Analytics by Ken Collier
 
Customer Service Excellence as a Strategy - SEE 2016
Customer Service Excellence as a Strategy - SEE 2016Customer Service Excellence as a Strategy - SEE 2016
Customer Service Excellence as a Strategy - SEE 2016
 
Starting up - Presentation at IEEE
Starting up - Presentation at IEEEStarting up - Presentation at IEEE
Starting up - Presentation at IEEE
 
The ups and down of agile in an agency
The ups and down of agile in an agencyThe ups and down of agile in an agency
The ups and down of agile in an agency
 
Illuminate 2017
Illuminate 2017Illuminate 2017
Illuminate 2017
 
Its Not About The Smoothie
Its Not About The SmoothieIts Not About The Smoothie
Its Not About The Smoothie
 
1140 track 3 ramirez_using our laptop
1140 track 3 ramirez_using our laptop1140 track 3 ramirez_using our laptop
1140 track 3 ramirez_using our laptop
 
This stuff is cool, but HOW CAN I GET MY COMPANY TO DO IT? Businessing the S*...
This stuff is cool, but HOW CAN I GET MY COMPANY TO DO IT? Businessing the S*...This stuff is cool, but HOW CAN I GET MY COMPANY TO DO IT? Businessing the S*...
This stuff is cool, but HOW CAN I GET MY COMPANY TO DO IT? Businessing the S*...
 
Agile Values, French Values and Your Company
Agile Values, French Values and Your CompanyAgile Values, French Values and Your Company
Agile Values, French Values and Your Company
 
Business Transformation Proposal Powerpoint Presentation Slides
Business Transformation Proposal Powerpoint Presentation SlidesBusiness Transformation Proposal Powerpoint Presentation Slides
Business Transformation Proposal Powerpoint Presentation Slides
 
Proposal a new Business(IT Training Center)
Proposal a new Business(IT Training Center)Proposal a new Business(IT Training Center)
Proposal a new Business(IT Training Center)
 
Graphic design company islamabad
Graphic design company  islamabadGraphic design company  islamabad
Graphic design company islamabad
 
Software project failure in new zealand – what’s killing us and what we can d...
Software project failure in new zealand – what’s killing us and what we can d...Software project failure in new zealand – what’s killing us and what we can d...
Software project failure in new zealand – what’s killing us and what we can d...
 
IPDcasestudy_Brookfield-1
IPDcasestudy_Brookfield-1IPDcasestudy_Brookfield-1
IPDcasestudy_Brookfield-1
 
Research Services Proposal PowerPoint Presentation Slides
Research Services Proposal PowerPoint Presentation SlidesResearch Services Proposal PowerPoint Presentation Slides
Research Services Proposal PowerPoint Presentation Slides
 
Creating the Future of Airline Travel Through Digital Transformation- Nandor ...
Creating the Future of Airline Travel Through Digital Transformation- Nandor ...Creating the Future of Airline Travel Through Digital Transformation- Nandor ...
Creating the Future of Airline Travel Through Digital Transformation- Nandor ...
 
Encouraging adoption of your digital workplace
Encouraging adoption of your digital workplaceEncouraging adoption of your digital workplace
Encouraging adoption of your digital workplace
 
Business Partnership Proposal Powerpoint Presentation Slides
Business Partnership Proposal Powerpoint Presentation SlidesBusiness Partnership Proposal Powerpoint Presentation Slides
Business Partnership Proposal Powerpoint Presentation Slides
 

Similar to South Africa Tour: Introduction to value-led pricing

Cloud services provider sales techniques
Cloud services provider sales techniquesCloud services provider sales techniques
Cloud services provider sales techniques
Lori Mankin
 

Similar to South Africa Tour: Introduction to value-led pricing (20)

Alternatives to scaling your agile process: valuing outcomes over output
Alternatives to scaling your agile process: valuing outcomes over outputAlternatives to scaling your agile process: valuing outcomes over output
Alternatives to scaling your agile process: valuing outcomes over output
 
Alternatives to scaling your agile process: valuing outcomes over output
Alternatives to scaling your agile process: valuing outcomes over outputAlternatives to scaling your agile process: valuing outcomes over output
Alternatives to scaling your agile process: valuing outcomes over output
 
DIGIT Leader Summit 2017
DIGIT Leader Summit 2017DIGIT Leader Summit 2017
DIGIT Leader Summit 2017
 
20 top AB testing mistakes and how to avoid them
20 top AB testing mistakes and how to avoid them20 top AB testing mistakes and how to avoid them
20 top AB testing mistakes and how to avoid them
 
InfoSec Experience It Not Enough…
InfoSec Experience It Not Enough…InfoSec Experience It Not Enough…
InfoSec Experience It Not Enough…
 
How GetNinjas uses data to make smarter product decisions
How GetNinjas uses data to make smarter product decisionsHow GetNinjas uses data to make smarter product decisions
How GetNinjas uses data to make smarter product decisions
 
Cloud services provider sales techniques
Cloud services provider sales techniquesCloud services provider sales techniques
Cloud services provider sales techniques
 
apidays LIVE Singapore 2022_There is no such thing as digital transformation....
apidays LIVE Singapore 2022_There is no such thing as digital transformation....apidays LIVE Singapore 2022_There is no such thing as digital transformation....
apidays LIVE Singapore 2022_There is no such thing as digital transformation....
 
Data and data scientists are not equal to money david hoyle
Data and data scientists are not equal to money   david hoyleData and data scientists are not equal to money   david hoyle
Data and data scientists are not equal to money david hoyle
 
Ecommerce Test Ideation: What to Optimize and Why
Ecommerce Test Ideation: What to Optimize and WhyEcommerce Test Ideation: What to Optimize and Why
Ecommerce Test Ideation: What to Optimize and Why
 
PUTTING THE VALUE BACK IN VALUE ENGINEERING: Leveraging Lean thinking to Driv...
PUTTING THE VALUE BACK IN VALUE ENGINEERING: Leveraging Lean thinking to Driv...PUTTING THE VALUE BACK IN VALUE ENGINEERING: Leveraging Lean thinking to Driv...
PUTTING THE VALUE BACK IN VALUE ENGINEERING: Leveraging Lean thinking to Driv...
 
GTM Masterclass Deck
GTM Masterclass DeckGTM Masterclass Deck
GTM Masterclass Deck
 
Changing Culture: Tips, tricks & transforming
Changing Culture: Tips, tricks & transformingChanging Culture: Tips, tricks & transforming
Changing Culture: Tips, tricks & transforming
 
BAD Toolkit - Berlin Overview
BAD Toolkit - Berlin OverviewBAD Toolkit - Berlin Overview
BAD Toolkit - Berlin Overview
 
NUS-ISS Learning Day 2019-Leading digital product team with business team model
NUS-ISS Learning Day 2019-Leading digital product team with business team modelNUS-ISS Learning Day 2019-Leading digital product team with business team model
NUS-ISS Learning Day 2019-Leading digital product team with business team model
 
Creating value by design thinking or create businesses that customers love
Creating value by design thinking or create businesses that customers loveCreating value by design thinking or create businesses that customers love
Creating value by design thinking or create businesses that customers love
 
The need for Business design to underpin strategic and operational agility
The need for Business design to underpin strategic and operational agility The need for Business design to underpin strategic and operational agility
The need for Business design to underpin strategic and operational agility
 
EIA2019HK - Problem-Solution Fit - Mike Kyriacou
EIA2019HK - Problem-Solution Fit - Mike KyriacouEIA2019HK - Problem-Solution Fit - Mike Kyriacou
EIA2019HK - Problem-Solution Fit - Mike Kyriacou
 
Training Taster: Leading the way to become a data-driven organization
Training Taster: Leading the way to become a data-driven organizationTraining Taster: Leading the way to become a data-driven organization
Training Taster: Leading the way to become a data-driven organization
 
Talent Analytics: Maximizing the TA Value
Talent Analytics: Maximizing the TA ValueTalent Analytics: Maximizing the TA Value
Talent Analytics: Maximizing the TA Value
 

More from Ed Kless

Scientific management and other leading techniques of a modern CPA firm
Scientific management and other leading techniques of a modern CPA firmScientific management and other leading techniques of a modern CPA firm
Scientific management and other leading techniques of a modern CPA firm
Ed Kless
 

More from Ed Kless (20)

Sell Your Brains, NOT Your Time
Sell Your Brains, NOT Your TimeSell Your Brains, NOT Your Time
Sell Your Brains, NOT Your Time
 
From fighting fires to fire insurance
From fighting fires to fire insuranceFrom fighting fires to fire insurance
From fighting fires to fire insurance
 
From fire fighting to fire insurance
From fire fighting to fire insuranceFrom fire fighting to fire insurance
From fire fighting to fire insurance
 
Innovation Beyond Technology
Innovation Beyond TechnologyInnovation Beyond Technology
Innovation Beyond Technology
 
Advanced thoughts on the value conversation
Advanced thoughts on the value conversationAdvanced thoughts on the value conversation
Advanced thoughts on the value conversation
 
Reflections on the post professional society
Reflections on the post professional societyReflections on the post professional society
Reflections on the post professional society
 
Shut up and eat your french fries: Asking Effective Questions
Shut up and eat your french fries: Asking Effective QuestionsShut up and eat your french fries: Asking Effective Questions
Shut up and eat your french fries: Asking Effective Questions
 
Creating strategy in the small business
Creating strategy in the small businessCreating strategy in the small business
Creating strategy in the small business
 
Changing conversations by asking better questions
Changing conversations by asking better questionsChanging conversations by asking better questions
Changing conversations by asking better questions
 
Creating strategy in a small business
Creating strategy in a small businessCreating strategy in a small business
Creating strategy in a small business
 
Leadership in the age of the quick fix
Leadership in the age of the quick fixLeadership in the age of the quick fix
Leadership in the age of the quick fix
 
Creating shared vision in a small business
Creating shared vision in a small businessCreating shared vision in a small business
Creating shared vision in a small business
 
Measure what matters
Measure what mattersMeasure what matters
Measure what matters
 
TSOE Top Ten Business Myths
TSOE Top Ten Business MythsTSOE Top Ten Business Myths
TSOE Top Ten Business Myths
 
MAX-558 Healing Leadership
MAX-558 Healing LeadershipMAX-558 Healing Leadership
MAX-558 Healing Leadership
 
Introduction to the firm of the future
Introduction to the firm of the futureIntroduction to the firm of the future
Introduction to the firm of the future
 
Scientific management and other leading techniques of a modern CPA firm
Scientific management and other leading techniques of a modern CPA firmScientific management and other leading techniques of a modern CPA firm
Scientific management and other leading techniques of a modern CPA firm
 
Sage Inspire Tour Keynote - Miami
Sage Inspire Tour Keynote - MiamiSage Inspire Tour Keynote - Miami
Sage Inspire Tour Keynote - Miami
 
Customer Lifetime Value
Customer Lifetime ValueCustomer Lifetime Value
Customer Lifetime Value
 
Creating value for your customers by becoming a knowledge organization
Creating value for your customers by becoming a knowledge organizationCreating value for your customers by becoming a knowledge organization
Creating value for your customers by becoming a knowledge organization
 

Recently uploaded

Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot ReportFuture of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Dubai Multi Commodity Centre
 
zidauu _business communication.pptx /pdf
zidauu _business  communication.pptx /pdfzidauu _business  communication.pptx /pdf
zidauu _business communication.pptx /pdf
zukhrafshabbir
 
What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...
AnaBeatriz125525
 
What is paper chromatography, principal, procedure,types, diagram, advantages...
What is paper chromatography, principal, procedure,types, diagram, advantages...What is paper chromatography, principal, procedure,types, diagram, advantages...
What is paper chromatography, principal, procedure,types, diagram, advantages...
srcw2322l101
 
NewBase 17 May 2024 Energy News issue - 1725 by Khaled Al Awadi_compresse...
NewBase   17 May  2024  Energy News issue - 1725 by Khaled Al Awadi_compresse...NewBase   17 May  2024  Energy News issue - 1725 by Khaled Al Awadi_compresse...
NewBase 17 May 2024 Energy News issue - 1725 by Khaled Al Awadi_compresse...
Khaled Al Awadi
 

Recently uploaded (20)

Hyundai capital 2024 1q Earnings release
Hyundai capital 2024 1q Earnings releaseHyundai capital 2024 1q Earnings release
Hyundai capital 2024 1q Earnings release
 
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot ReportFuture of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
Future of Trade 2024 - Decoupled and Reconfigured - Snapshot Report
 
Innomantra Viewpoint - Building Moonshots : May-Jun 2024.pdf
Innomantra Viewpoint - Building Moonshots : May-Jun 2024.pdfInnomantra Viewpoint - Building Moonshots : May-Jun 2024.pdf
Innomantra Viewpoint - Building Moonshots : May-Jun 2024.pdf
 
Series A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by AccionSeries A Fundraising Guide (Investing Individuals Improving Our World) by Accion
Series A Fundraising Guide (Investing Individuals Improving Our World) by Accion
 
zidauu _business communication.pptx /pdf
zidauu _business  communication.pptx /pdfzidauu _business  communication.pptx /pdf
zidauu _business communication.pptx /pdf
 
Copyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to KnowCopyright: What Creators and Users of Art Need to Know
Copyright: What Creators and Users of Art Need to Know
 
Sedex Members Ethical Trade Audit (SMETA) Measurement Criteria
Sedex Members Ethical Trade Audit (SMETA) Measurement CriteriaSedex Members Ethical Trade Audit (SMETA) Measurement Criteria
Sedex Members Ethical Trade Audit (SMETA) Measurement Criteria
 
What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...What is social media.pdf Social media refers to digital platforms and applica...
What is social media.pdf Social media refers to digital platforms and applica...
 
Making Sense of Tactile Indicators: A User-Friendly Guide
Making Sense of Tactile Indicators: A User-Friendly GuideMaking Sense of Tactile Indicators: A User-Friendly Guide
Making Sense of Tactile Indicators: A User-Friendly Guide
 
Elevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO ServicesElevate Your Online Presence with SEO Services
Elevate Your Online Presence with SEO Services
 
What is paper chromatography, principal, procedure,types, diagram, advantages...
What is paper chromatography, principal, procedure,types, diagram, advantages...What is paper chromatography, principal, procedure,types, diagram, advantages...
What is paper chromatography, principal, procedure,types, diagram, advantages...
 
Equinox Gold Corporate Deck May 24th 2024
Equinox Gold Corporate Deck May 24th 2024Equinox Gold Corporate Deck May 24th 2024
Equinox Gold Corporate Deck May 24th 2024
 
Creative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team PresentationsCreative Ideas for Interactive Team Presentations
Creative Ideas for Interactive Team Presentations
 
Falcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small BusinessesFalcon Invoice Discounting Setup for Small Businesses
Falcon Invoice Discounting Setup for Small Businesses
 
Toyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & TransformationsToyota Kata Coaching for Agile Teams & Transformations
Toyota Kata Coaching for Agile Teams & Transformations
 
NewBase 17 May 2024 Energy News issue - 1725 by Khaled Al Awadi_compresse...
NewBase   17 May  2024  Energy News issue - 1725 by Khaled Al Awadi_compresse...NewBase   17 May  2024  Energy News issue - 1725 by Khaled Al Awadi_compresse...
NewBase 17 May 2024 Energy News issue - 1725 by Khaled Al Awadi_compresse...
 
Aptar Closures segment - Corporate Overview-India.pdf
Aptar Closures segment - Corporate Overview-India.pdfAptar Closures segment - Corporate Overview-India.pdf
Aptar Closures segment - Corporate Overview-India.pdf
 
8 Questions B2B Commercial Teams Can Ask To Help Product Discovery
8 Questions B2B Commercial Teams Can Ask To Help Product Discovery8 Questions B2B Commercial Teams Can Ask To Help Product Discovery
8 Questions B2B Commercial Teams Can Ask To Help Product Discovery
 
LinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptxLinkedIn Masterclass Techweek 2024 v4.1.pptx
LinkedIn Masterclass Techweek 2024 v4.1.pptx
 
Raising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE VenturesRaising Seed Capital by Steve Schlafman at RRE Ventures
Raising Seed Capital by Steve Schlafman at RRE Ventures
 

South Africa Tour: Introduction to value-led pricing

  • 1. Introduction to Value-led Pricing Ed Kless @edkless
  • 2. What is a Business Model? How your firm creates value for and captures value from customers. @edkless
  • 3. “Disruptive threats come inherently not from new technology but from new business models.” - Andy Grove, Founder, Intel
  • 4. A Tale of Two Theories (Business Models) Revenue = People capacity + Efficiency + Cost-plus pricing Current Model: Professional Service Firm New Model: Professional Knowledge Firm Profit = Intellectual capital + Effectiveness + Value-led pricing ↑ ↑ ↑ ↑ @edkless
  • 5. Four Assertions 1) Growth without profit is perilous 2) Nonrival assets have more leverage than rival assets 3) Effectiveness is always and everywhere more important than efficiency 4) Value-led pricing is superior to cost-plus pricing for capturing value created by PKFs @edkless
  • 10.
  • 12. Four Forms of Capital • Financial • Intellectual • Structural • Social @edkless
  • 13.
  • 15. The Antithesis of Efficiency • This session • All continuing education • Knowledge management • Total quality service • Mentoring and coaching • Networking • Business development • Social media • Innovation • Pricing on purpose @edkless
  • 16. From Cost-plus to Value-led pricing @edkless
  • 18. Two Basic Pricing Methods Cost-led pricing Product  Cost  Price  Value  Customer Value-led pricing Customer  Value  Price  Cost  Product @edkless
  • 19. Unlearn • What you do (or have to offer) has intrinsic value • Business exchanges are like for like • Price is primarily a function of cost Remember • Intent counts more than technique • NO GUESSING! (Move off the solution) • Slow down for yellow lights Three things to unlearn & Three things to remember @edkless
  • 20. 1. Listen 2. Assuage 3. Move 4. Close The four steps to move off the solution @edkless
  • 21. I need to replace QuickBooks for my growing firm in need of a more flexible accounting solution. Is that something you guys can do? We can. Companies that out have outgrown QuickBooks are right in our sweet spot. Would it be OK if I asked you about what a more flexible accounting solution means in your specific context? Clarify – Example 1 @edkless
  • 22. Clarify – Example 2 I’d be glad to offer my thoughts. Help me out. When you say you want to improve your financial reports internally and externally, can I ask what that means? We want to implement a more effective accounting system to improve our financial reports internally and externally with customers. Can you give me a demo of Sage Pastel? @edkless
  • 23. Clarify – Example 3 The first thing that I’ll say about my experience is that everyone who asks for integrations with Sage Live has something slightly different in mind. Would it be okay if we talked a little about why you want to integrate so I can make my comments more relevant? I’m looking to purchase a new finance system that includes purchase order requisition and a personnel system that will integrate with our clocking-in system, and allows for the digital import of invoices with OCR. What options are available to connect to our systems to Sage Live? @edkless
  • 24. Presumptive Clarify – Example 1 I’ll be happy to give you price once I understand exactly what you want to accomplish and at this point it would be presumptive of me to guess. Would you mind giving me some details about what you are hoping a new Sage Intacct- based system would do for you? I am looking for information about Sage Pastel, but I’ll be honest our main concern is price. Please tell me how much you would charge. @edkless
  • 25. Presumptive Clarify – Example 2 Fair enough, Cloud is a hot topic right now. However, it would be presumptive of me at this point to offer my opinion since Cloud environments have different definitions. Could you give me yours? Our new IT director feels there are advantages to moving to a Cloud-based environment. I would like your opinion. @edkless
  • 26. Bonus Content: Marston’s Circle of Scope @edkless
  • 27. Yellow Light – Example 1 I have a concern. If we have no evidence or sense of impact of the problem, is it possible that somebody, somewhere is going to seriously question the validity of this project? The customer is pushing to move ahead with developing a solution to solve the problem without identifying the evidence of its existence and impact on the organization. @edkless
  • 28. Yellow Light – Example 2 I have a concern. It seems the cost of a solution may be larger than the problem itself and it makes little sense to continue moving ahead. Am I missing something? You believe the cost of the solution your customer is asking for is larger than the cost of the problem it is intended to solve. @edkless
  • 29. Yellow Light – Example 3 I have a concern. I don’t know if your CFO is like our CFO. However, at our company, even if everyone thinks there is a problem, there needs to be a business case backing up the request before he will allocate money. Could that be a possibility here? Your customer does not want to take the time to develop a business case for the solution because, “everyone knows it is a problem.” @edkless
  • 30. The Five Golden Questions – Getting to Value Recognize a “measurable” word • Revenue • Cost • Customer satisfaction • Quality • Performance • Productivity • Et al. Ask Mahan Khalsa’s Five “Golden Questions” • How do you measure it? • What is it now? • What do you want it to be? • What is the value of the difference? • Over time (usually one year)? @edkless
  • 31. A 1% Improvement in: 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% - Fixed Costs + Revenue - Variable costs + Price 2.7% 3.7% 7.3% 11.0% 1.5% 2.5% 4.6% 7.1% McKinsey AT Kearny @edkless
  • 32. “The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” -Warren Buffet @edkless
  • 34. Presuppositions • Defined value • Completed a scope or at least an agreed upon set of objectives: • Deploy… • Educate… • Provide… • Convert… • Develop… • Integrate… @edkless
  • 35. Van Westendorp’s Model • At what price would this customer think this is too expensive and not buy it? • At what price would this customer think this is expensive, but most likely buy it? • At what price would this customer think this is cheap, but still likely to buy it? • At what price would this customer think this is too cheap and not buy it? @edkless
  • 36. Dan Ariely – The Economist sets price @edkless
  • 37. The Numbers Two options Three options Selected Price Revenue Selected Price Revenue One year, web only 68 59 4,012 16 59 944 One year, print only - - - - 125 - One year, print and web 32 125 4,000 84 125 10,500 Total Revenue 8,012 11,444 43% Production costs 32 30 960 84 30 2,520 Profit 7,052 8,924 27% @edkless
  • 39. Seven Ts to Offering Choices 1) Terms 2) Timing 3) Technology 4) Talent 5) Tailoring 6) Transference 7) Travel @edkless
  • 41. The Baron Joseph von Neinbach Model WA HF PF C B A @edkless
  • 42. Questions to ask before setting price • What does the customer think the value of our solution is? • Have we done a complete scope document/project plan? • With whom on organization chart am I dealing? • Who referred this customer to us? Why were we referred in the first place? • Do they have any time sensitive deadlines for the completion of this project? Why do they need to do it now and not in six months? • Who’s paying for this? Are they spending other people’s money? • Do we have any competitors? If so, who? What price information do we have about these competitors? What is the price of the next best alternative offering? • How profitable is customer’s company? How long have they been in business? • How busy are your resources? • Have they engaged with someone else prior to us to do similar work? Who was prior firm and why are they changing? • How sophisticated is the customer? • Does customer add to firm’s skills or markets? • Do we like this customer? What is the state of their restroom? • How do we help reduce the customer’s risk? @edkless