Value-Based Pricing
Value pricing compares economic benefit to the customer’s best alternative.
Cheat sheet
Value pricing compares economic benefit to the customer’s best alternative.
What to check first
Validate utilization and savings with the buyer. Allow for switching costs and risk.
How to make the call
Offer a measured pilot and price against verified savings.
OpenStax · Pricing products and services · further reading for pricing & product
Indian practice case
Fictional scenario
A Surat textile equipment supplier saves a mill ₹2 lakh annually versus the existing machine, after operating costs.
Reveal the step-by-step solution
- Diagnose the problem.
Validate utilization and savings with the buyer. Allow for switching costs and risk.
- Work through the evidence.
A ₹70,000 annual premium leaves ₹1.3 lakh of estimated annual buyer value before switching costs.
- Recommend and validate.
Offer a measured pilot and price against verified savings.
More Indian cases
Interview question
How would you use value-based pricing to make the decision in this case? Explain which data you need first and what would change your recommendation.
See what a strong answer includes
A ₹70,000 annual premium leaves ₹1.3 lakh of estimated annual buyer value before switching costs. Offer a measured pilot and price against verified savings.