Let’s look at an example of how identifying the right value metric can impact pricing, and a company’s immediate and long-term profitability. These are the customers that will be happiest and most successful, the kind of customers you want to build a business on. For pricing to be effective, it should track the value metric. This is the unit by which the product or service offering is consumed that best reflects how the customer gets value. Prices should align with the value the customer receives, thus ensuring the seller is maximizing returns from and targeting customers that derive the most value from the offering. Understanding how a product or service offering creates differentiated value for the customer is the foundation of value-based pricing.
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