Value-Based Pricing: A New Business Transformation Model

By Joe Truncale
In September 3, 2010

Unprecedented pressure on pricing and a suffocating strain on profits—it’s an all-too-common lament of so many printing and graphic communications companies today.

A universal business truth, known to economists, marketers and business analysts for years, has come into sharp painful focus for members in our industry. Customers will pay as little as possible for what they perceive to be a commodity. What’s the good news? These same customers will pay a premium for what they perceive to be unique value.

Who knows what represents unique value to customers? Scary answer: They do. And what’s even scarier is that the tried and true methods of traditional print sales are not designed to get at this most critical information in a way that can help businesses create the kind of customized and highly focused response that takes the customer relationship to higher levels of loyalty and profitability.

When we truly understand what it is a customer is trying to accomplish, what obstacles are in their way, which opportunities they are trying to exploit, only then can we offer an approach that moves us from being a commodity producer to a valued strategic partner, critical to the ongoing success of our customers.

OK so far. But how do we do this? It begins, like so many things, with our customers. More to the point, the kind of conversations we are having with our customers. Conversations that contain more questions than answers, open questions designed to get customers talking about their opportunities and challenges. It also includes a robust method of gathering customer feedback, done in a systematic and statistically valid way, a way that tells us what it is that customers value most.

When we understand what is at stake for our customers, we are in a far better position to respond. That done, pricing necessarily takes on a different dimension, where the value of the product and service rendered (as measured in the extent to which it solves a problem or creates an opportunity for a customer) is the key determinant, more so than simply cost plus.

There is a structured way to move to this type of selling and business development model. It is part of a business transformation model that more industry firms need to embrace.

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