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This is not the definition of value based pricing

Maybe you’ve heard of “value-based pricing,” before. Maybe someone gave a talk about it. They told you that it was the way to raise your rates. And they weren’t wrong. At least not technically.

But if you showed up to a meeting with a new vocabulary, but other than that not much else had changed, there’s a good chance you misunderstood what value-based pricing was all about.

It’s not about raising your rates.

It’s not about changing how you talk, so that you say “value” a lot.

It’s not about your definition of the value a customer should have, regarding the service you’re delivering.

I could go on and on about what’s not the definition of value based pricing.

But sometimes a simple illustration helps.

Here’s mine.

When you get it right, it’s a beautiful thing – matching up the value you deliver, as defined by your customers, and the price you charge. Airlines do it. Hotels do it. And you can do it too. But it all starts with segmentation.

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