Pricing is the most powerful variable to create revenue and determine the competiveness of a company. it also deepens the understanding of the needs of customers and their willingness to pay for your products and services. Unfortunately, pricing is one of the most neglected tools in marketing.
Understanding how pricing can be used by social entrepreneurs is the start of my research. I am a social entrepreneur and I wondered if pricing could help me become more comeptitive.
First, I want to introduce myself.
MY NAME IS GLORIA VAN EWIJK AND I AM FROM THE NETHERLANDS. I AM A SOCIAL ENTREPRENEUR AND FOUNDED MY COMPANY LIFE IMPACT COMPANY, 10 YEARS AGO.
THE MISSION OF MY COMPANY IS TO CONTRIBUTE TO A SOCIETY BASED ON RECIPROCITY WHERE EVERYONE BELONGS AND IS IMPORTANT.
IN 2012 I FINISHED MY EXECUTIVE MBA, RESEARCHING THE TOPIC OF VALUE BASED PRICING BY DUTCH SOCIAL ENTREPRENEURS.
MY RESEARCH IS AN EXPLORATION AND PRACITICAL IMPLICATIONS FOR THE WAY SOCIALE ENTREPRENEURS IMPLEMENT SOCIAL VALUE THROUGH THEIR PRICING STRATEGIES.
FOCUSSING ON THE ROLE OF ATTITUDE, PERCEPTIONS AND THE EXPERIENCES BY DUTCH SOCIAL ENTREPRENEURS WHO ALREADY USE VBP.
1. FIRST I FOCUSED ON SOCIAL ENTREPRENEURS, I NOTICED THAT THEY ARE GAME CHANGERS. NOT ONLY ARE THEY CREATING NEW MARKETS, USING NEW BUSINESS MODELS. THEY ARE USING DIFFERENT PRICING STRATEGIES. MANY SOCIAL ENTREPRENEURS FEEL THE NEED TO CHANGE THE TRADITIONAL ECONOMY AND CHALLENGE THE STATUS QUO REGARDING THE PURPOSE OF ENTREPRENEURSHIP.
2. IN THIS DIGITAL ERA CUSTOMERS ARE BECOMING MORE PRICES SENSITIVE. THE INTERNET IS EMPOWERING THEM TO BECOME AWARE OF DIFFERENT PRICING STRATEGIES OF COMPANIES. IT MAKES THEM SAVY AND CRITICAL ABOUT HOW COMPANIES PRICE THEIR PRODUCTS AND SERVICES. ESPECIALLY IN TIMES OF CRISIS.
3. SOCIAL ENTREPRENEURS WANT TO IDENTIFY THE IMPACT THEY MAKE AND TRANSLATE THE VALUES INTO ACTION. THE ALIGNMENT VALUES IN ALL COMPONENTS OF THE BUSINESS MODELS, SO ALSO FOR YOUR PRICING STRATEGY, CREATES MORE IMPACT.
IF WE WORK LOOK AT PRICING STRATEGIES. THEY CAN BE DIVIDED IN THREE MAIN CATEGORIES: COST-BASED PRICING, COMPETITION-BASED PRICING AND VALUE-BASED PRICING.
COST-BASED IS THE EASIEST AND MOST POPULAR. TAKE THE AVERAGE COST AND AD A PERCENTAGE COMPETITION-BASED WE COMPARE THE FEATURES AND SPECIFICATIONS OF THE PRODUCT WITH THE COMPETITION VALUE-BASED PRIMARILY BASED UPON PERCEIVED OR ESTIMATED VALUE BY THE CUSTOMER.
HYBRID PRICING COMBINING THE DIFFERENT PRICING STRATEGIES
VALUE BASED PRICING is
Focus on a single segment. The first thing to know about value-based pricing is that it always references one specific segment. Understand differentiated value. Understanding what makes your product and service unique, that is, differentiated, from the competitor’s offering. Co-create with your customer. Working closely with your customer, understanding what value means to him, can make your customer a prosumer. Someone who co-creates your product and services.
ONE OF THE GREATEST CHALLENGES OF USING VBP IS THE LEVEL OF UNDERSTANDING BY THE CUSTOMER AND THEIR ABILITY TO ASSESS THE VALUE THAT IS OFFERED. THE ENTREPEUREUR NEEDS CUSTOMERS WHO VALUE THEIR OFFER AND RECOGNIZE THE IMPACT. PRICING UPON VALUE CAN BE TRICKY BECAUSE EVERY CUSTOMER IS UNIQUE.
THERE HOWEVER SITUATIONS IN WHICH VBP CAN BE SUCCESFULLY USED.
SO HERE ARE SOME EXAMPLES OF COMPANIES USING VALUE BASED PRICING.
Value Based Pricing
“The only variable of the marketing mix that creates
revenue and determines the competitiveness of a
company is pricing”
- De Toni et al
• 2016 Nomination Opzij Impact Award
• 2011 Winner Executive MBA Scholarship
• 2009 Founder Life Impact Company
GLORIA VAN EWIJK MSC MBA
The role of values, attitudes, perceptions and experiences of Dutch
social entrepreneurs in their decisions toward Value Based Pricing.
3. Alignment of
Set your own price
Gap price policies, value
proposition and customer
Takes market into account
Change prices only when
the competition does
Creates a passive mindset
Relies on customer’s
willingness to pay
Depends on customer’s
ability to understand your
Working closely with the
Primarily based upon perceived
or estimated value by the
New or enhanced products
Competitors in your
market already use VBP
Unique package of
products and services
Introduction of existing
products or services
into new markets
based on clear
understanding of the
Products completely new to
the world with no viable
Buyers make a suggestion for a
product’s price and the transaction
occurs only if a seller accepts this
NAME YOUR OWN PRICE
The customer must pay a
subscription price to have access to
the product / service.
Let the customer decide what they
want to pay for the product / service
PAY AS YOU WISH
himself as the supplier of the
highest price product in the
Flexible prices for products or service
based on current market demands.
The product or service is free of
charge, but money (premium) is
charged for additional features and
Difficult to understand how higher
value translates to higher prices
Traditional businesses are not ready
to work with value-based pricing
Customers have different needs and
do not always want to work closely
with the entrepreneur
Value based pricing created new
opportunities, markets &
Co-creating closely to the customer
Responding to actual need of the
customer and learning from them