Monday, April 02, 2007

concept: the value of a penny

Well nothing that's real is ever for free and you just have to pay for it sometime. --- Al Stewart

How many times have you been involved in a pricing exercise? Now ask yourself how many times you've been involved in a value exercise? Do you spend as much time calculating the value you deliver as you do determining how much the customer should pay for it?

Soft benefits for hard dollars. . . I've sung that tune. If you've sung it too, or if, G-d forbid, you're singing it now, try this idea on for size (if you're pushing open source software, sorry, you can't play):

Reduce the cost of your product to a penny. Enough that your customer has to go through the exercise of paying for it - a process that on its own will cost more to their company than what you're charging.

Would they still do it?

I'm not suggesting you need to do a full-blown ROI study for everything you sell. But I am telling you that you need to answer the "so what" questions about the value your product or service delivers before you begin to consider price. Unless you really like long sales cycles and deep discounts.

Once you think you've answered all of the "so what" questions, be prepared for the killer "really" retort. Extravagant claims that strain the credulity of your buyer must be justified. Or else.
"The AckMe Mark IV Articulated Frabjulator is the only product of its kind on the market today with a triple-phase actuator arm!"

"So what?"

"The triple-phase actuator arm accelerates widget acquisition and displacement to unheard-of levels!"

"So what?"

"Speeding up your assembly line increases the efficiency of your entire operation!"


"Ummm . . . ."

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