Two weeks ago I outlined how to implement a value based pricing strategy. Within that article I outline why an organisation should use Value-Based Pricing over other pricing strategies, how an organisation can go about creating ideal customer personas to help them determine their value to their target market. I’m hoping the readers of that article came out the other end ready & refreshed to learn more about how their customers value their organisation, products and services.
I previously wrote that to determine how your customers value your product and service you will need to survey certain customers that match your ideal customer personas. Bu what would these questions look like? These questions will be shaped around your:
- Products & Features
- What it’s worth to them?
- What they would be willing to pay.
Going from these categories I have outlined a number of questions which you can use to graph and then perform an analysis on the date to determine what your customers actually value.
Firstly, you want to know which of your products & services your ideal customer personas value the most. So list down all of the products/features/services your organisation provides. Then use this list and ask for them to be ranked from most valuable to least valuable. The questions can be worded like this:
Please rank our (insert products/services/features) from most valuable to least valuable in regards to your needs and/or which you have found to be the most beneficial to you in your experience
Depending on the number of ideal customer personas you have, you are looking for a varied number of results when in comparison to each persona. Following the collection of this data you will begin to notice (hopefully) similar patterns between the personas. From this you may be able to create certain packages designed towards the right group.
Secondly, you want to determine what each product/feature/service is worth to them and what they would be willing to pay. Once they have ranked each of your product & features in order, the best for you would be if even your target group can assign values to what they would be prepared to pay. This will need to be completed in accordance with how your purchasing systems works, ie if you’re a membership based product or if its just an initial outright cost, and can naturally be quite tricky. It’s easy to assume that if you ask what someone would like to pay, that’s most often as low as possible. However, give them guidelines on what values you’re looking for. Allow them to select from an already determined selection, for example (this needs to be done for every product/feature/service that your organisation provides):
What would you think would be a fair price for (insert feature)?:
$50 $100 $150 Greater Than Less than
Note that this is slightly different from asking “How much would you be willing to pay for…“. Using this will unfortunately only be in order to establish more or less a base-line for your pricing, since it psychologically also will work in the way that you have established the least cost you’re preparing to sell for, so it will unfortunately not allow you to graph the price ranges and understand the overall value of each of your products and features. The only way to do that will be to make a pricing test where you let people actually purchase at the different price-levels.
This may actually surprise you
So be prepared for possibly getting an early idea with the question, which may give you guidance as how to set up a real pricing test.
If you feel that your ideal customers are actually undervaluing your brand and products then possibly you need to go back to see how you can add more value to the product or service. Alternatively, you may find it even more fruitful to start over and look for a new target market and ideal customer personas. Hopefully, you have gone for the correct personas and they have valued your products and services at a reasonable price or in some cases higher than you were expecting.
The third and final question (remember you want to keep this as short as possible to ensure survey completion) is optional, but it can help you in the future with your sales process. It is:
What problem or issue would product/feature/service be solving for you?
Issue 1 Issue 2 Issue 3 Issue 4
You should already have a pretty good idea on what issues your products are solving for your potential customers, otherwise you likely wouldn’t have them in the first place. If not, you need to do this ASAP, and this should be the absolute first thing to do! List the problems you wish to solve and allow the customer to explain to you what value they are hoping to receive from each problem solved. This allows you to gather a wide understanding on what value they give your products and how much they value the solution to these problems.
Obviously, the bigger and more urgent problems you can solve for your target market the more they will value your solution. Use this as an outline to how you could implement value-based pricing, even if you’re not interested in shifting to a value-based pricing strategy, this can be a fun experiment to conduct to understand the value you provide to your target market.
We have developed our own example to help us determine the most valuable marketing automation feature so please click here to fill out the survey (Friendly Warning – The Survey is in Swedish)