Value Pricing. What is it and how you can (and should) use the model

We all know it to be true – website development and digital marketing services can cost a bundle. Oftentimes, business owners and entrepreneurs can spend more than $5,000 on a website. 

They may pay even more than that for basic digital marketing services. Ultimately, the final price comes down to the agency they choose and the type of work that will be performed. 

Granted, most people nowadays already understand the importance of establishing an online presence. Yet, convincing even the most financially-successful businesses to buy into your services can be much more difficult when they’re not aware of the value of your services. 

Thus, many agencies have switched to pricing models that factor in value to the customer. Below, you’ll learn why value pricing is such a big deal and why you do implement the same strategy moving forward. 

What is Value Pricing?

Value pricing is simply a model in which a good or service’s price is based on its value to the customer. For example, if a particular accounting software claims to save you hundreds of dollars in tax penalties every year, it may cost the same in an annual subscription. 

Basically, the value of the service to your business, both tangible and intangible, is represented in the price. This model is much different than the “cost-plus” pricing model a majority of businesses use. 

This model simply allows businesses to charge customers a price that reflects the labor involved. For example, many website development agencies will charge thousands of dollars for eCommerce websites because they are very time-consuming and extensive to build. 

Why Does Value Pricing Even Matter?

If you’re selling a service to entrepreneurs, freelancers, business owners, and anyone else in a B2B market, you can’t rely on approaching them as if you’re selling apples on a street corner. 

These individuals have budgets in place and aren’t prone to spend at a whim like average consumers. They specifically want to know how your service will benefit them, or simply, “what in it for them”.

It doesn’t matter if you sell a website they desperately need or an advertising service, clarifying the value your customers aim to receive from your service is vital to its success.

Benefits of Implementing a Value Pricing Model

Implementing a value pricing model ultimately will have a significant impact on your bottom line. Top benefits include:

  • Higher Conversions – When a potential customer recognizes they’ll truly profit from your service, they’ll be more eager to convert.
  • Improved Brand Trust – Rather than simply pitching your services to prospects, you can instead communicate the exact cash value and ROI they’ll receive, allowing them to trust you and convert.
  • Reduced Bottlenecks – Pricing is usually the largest obstacle sales teams encounter. When marketing teams stress value in copy and collateral, sales teams can convert more leads who are more likely to pay attention. 

Need Help With Pricing?

Ultimately, implementing a value pricing model is more than setting prices. You’ll have to reshape your brand’s marketing message among other things. If you’d like to delegate this task, we’d love to speak with you.

Contact us today to speak with a member of our team today!

Originally Published

Filed Under

Like this article?

Share on Facebook
Share on Twitter
Share on LinkedIn

Leave a comment