You have the offering and you know which markets to target, but do you really know how much to charge? Learn how to set prices with confidence. * Overview of value based pricing principles * How to align price with the value that your offerings deliver * How to structure product offerings to capture that value * How to use simple tools to set prices with greater confidence

1. The Art and Science of Pricing:
Simple tools to align price and value
May 3, 2014

2. Ultimately, what
matters in pricing is
customer value.
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3. Can you reduce
your customers’
costs?
Can you increase
your customers’
revenue?
Measure it and communicate it to your customers
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4. $300,000 per year
• Used by patients that fall under a specific
genetic profile
•Breakthrough results:
•replaces 12 less effective drugs
•reduces hospitalization costs,
•reduces likelihood of transplants
• doubles the life of patients
$100,000 per year
• It’s not yet known what the drug may do for individual patients,
•Finding out who will benefit is through costly, inefficient trial and
error
•Value is at best uncertain and at worst no greater than that of a
barely effective alternative at half the price.
•50 percent discounts in USA
•U.K.’s drug watchdog, the National Institute for Health Care and
Excellence (NICE), turned the drug down for reimbursement.
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5. vs.
How does Boeing justify a price premium on its latest aircraft models?
Innovation:
Benefit: Reduced Fuel Costs
VALUE
$140, 000
in annual
fuel
savings
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6. Breaking Down a Broad Customer
Benefit
We have a
strong brand!
What does your
brand mean to a
typical customer?
(why do they buy
from you?)
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7. Breaking Down a Broad Customer
Benefit
Why is that
important to the
customer?
It means we
have the most
reliable product
in the industry.
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8. Breaking Down a Broad Customer
Benefit
How often does it
happen with your
competitor?
Because
unplanned
downtime is a
big issue for
them.
How does that
impact the
customer’s cost
of operation?
How do you
measure the cost
of unplanned
downtime?
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9. Can you estimate the impact of
better quality?
Benefit Cost or Revenue Probability
of event
%
improvement
Less rework Cost of
defects/scrap/rework
Establish
estimates
Establish
benchmarks
Less repairs Repair costs
Less likelihood of
downtime
Cost of downtime
Higher
competitiveness
due to higher
reliability
Profit potential from
access to markets
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10. Set a value based price in 4 easy steps
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11. To get started
• Offering
• Customer or segment
• Competitor
• How value is measured
• Competitor price
• Advanced coating system
• Contractors
• Existing coating technology
• Per Year
• Estimate based on
customer size
Establish Context Case Study
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13. Use pricing metrics that capture value
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14. Are you ready for a price change?
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15. Thank You!
Roberto Rivera
Founder, Price on Value
roberto@priceonvalue.com
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