Whatever you sell, pricing could be anything: from ‘Free’ to ‘Tons of money’.

Pricing does not have to be ‘cost base’; if you can sell something for 10000 Euro that only cost you 100 Euro, why not do so? Maybe you are scared that the customer will realise at a later stage that he might have been able to get it cheaper…

In practice, pricing should be guided by:

  • The value to the customer. This is also called “value based pricing / selling”
    • Say your solution can save the customer 10m Euro, how much should you price your solution?
    • You can use NPV & DCF to estimate the value to the customer
    • Value is none the same as price. As Warren Buffet says: “Price is what you pay, Value is what you get”
  • The price of competitive offerings. That’s why understanding the competition is useful!
  • Your costs – you want to make profit after all

In a customer engagement, don’t come too early with price discussion:

  • It tends to ‘pollute’ the discussion
  • You want to understand the customer needs first