Value-Based Pricing: Drive Sales and Boost Your Bottom Line by Creating, Communicating and Capturing Customer Value by Harry Macdivitt and Mike Wilkinson
Negotiating With Backbone: Eight Strategies To Defend Your Price and Value by Reed K. Holden
Two new books out this spring are worth reading by anyone interested in how to price and sell more effectively. Both of these books are worth a careful read, and both call out the importance of applying the value-based approach to sales and the B2B sales negotiation.
In their new book Value Based Pricing, two of Europe's top pricing and sales effectiveness consultants have followed up their book The Challenge of Value with a deeper dive into value-based pricing and how it connects to value-based selling and pricing strategy. One interesting aspect of their Value-Based Pricing book is their Value Triad that organizes thinking around Value to the Customer around Cost Reduction (OK, everyone tries to cover this), Revenue Gains (often the most important and powerful value drivers, and the most difficult to demonstrate) and Emotional Contribution. At LeveragePoint we generally try to address the subjective factors that Macdivitt and Wikinson cover under 'Emotional Contribution' as Pricing Sensitivity Factors, but as Prospect Theory shows us it is critical to think through cognitive and emotional issues carefully when setting and communicating prices. Using the worksheets in this book will help you to do this. The Value-Based Pricing book is important and useful as it (i) provides a good review of value-based pricing based on deep experience; (ii) links value-based pricing to value-based selling by the means of value propositions (this is the same workflow that is supported by the LeveragePoint platform); and (iii) it provides very practical worksheets that people can use to get started with value-based pricing.
Reed Holden needs no introduction to people in the pricing community. He was the co-author with Tom Nagle on the second edition of The Strategy and Tactics of Pricing and has made many contributions to pricing best practices. His previous book, with Mark Burton, Pricing With Confidence, is the best introduction to pricing for the general business reader. At the heart of his new book are eight scenarios that are frequently encountered in B2B sales. Holden makes it easy for sales people to identify each scenario and provides clear advice on how to handle them. In most cases a clear understanding of differentiated economic value is needed for effective negotiation. The eight scenarios covered are
1. The Penny Pincher
2. The Scout
3. In the Pack
4. The Patient Outsider
5. The Player
6. The Crafty Outsider
7. The Advantaged Player
8. The Rabbit
Sound intriguing? It is! And understanding each of these buying scenarios and how to negotiate on price will do a lot to improve price capture.
It is good to see a growing interest in and appreciation for value-based pricing and its application to product management, marketing and sales. As recent research has shown, the ability to combine value-based pricing with great price capture practices is the key to winning in B2B.
For more information on Harry Macdivitt and Mike Wilkinson's work see Axia Value Solutions.
For more information on Reed Holden see Holden Advisors.