Value Proposition Pricing

Last quarter, I told a client to RAISE their prices by 50% In the middle of a recession. While losing deals to cheaper competitors. When their win rate was already below 20%. They took the risk The results? → Win rate: Jumped from 19% to 40% → Sales cycle: Cut from 118 days to 70 → Revenue: Up 150% in just 90 days Here's what we discovered: Their low prices weren't making them more competitive They were making them less trustworthy When we analyzed their lost deals: 80% of prospects who said "too expensive" never bought from anyone The deals they won at discounted prices had 2X higher churn rates Procurement was treating them as a commodity because they positioned as one Their best customers were the ones who DIDN'T negotiate on price So we implemented what I call "Trust-Based Pricing": - We increased prices to reflect the true value delivered - We eliminated all discounting completely - We restructured compensation to reward margin, not revenue - We trained reps to walk away from price-sensitive prospects The transformation was immediate: - Prospect engagement quality: Increased 100% - Deals requiring procurement approval: Reduced by 60% - Implementation success rate: Up from 50% to 75% - Average customer lifetime: More than doubled The dangerous myth killing your sales growth: Lower prices win more business. The reality? In complex B2B sales, your price is a powerful signal about your confidence and the value you deliver. Your competitors are busy slashing prices and offering "special discounts." Meanwhile, market leaders are systematically increasing prices and watching their close rates improve. What if you raised your prices tomorrow and trained your team to confidently defend the new value proposition? P.S. If you need help with your sales, send me a message

Price is never just a figure. It represents how the market perceives the value you deliver. When businesses start thinking this way, they stop racing to the bottom and begin leading with clarity and purpose. That is where lasting profitability begins. Many companies still assume customers base their decisions on price alone. That assumption has cost them significantly. When I started helping businesses uncover what their customers truly value, everything shifted. I saw companies dramatically increase their growth and improve margins by 25 to 40 percent. This success didn’t come from cutting expenses, but from aligning pricing with real customer value instead of relying on guesswork. At Sjöfors & Partners - Pricing for Profits and Growth, we created a process that combines value research, predictive analytics, and artificial intelligence to identify what motivates a customer to buy and what they are genuinely willing to pay. The focus is not on being the lowest priced option. It is becoming the most valued option. When companies understand this, profitability naturally follows. #PricingStrategy #ValueBasedPricing #ThoughtLeadership #BusinessGrowth #Profitability #CustomerCentric

Pricing is strategy. Not just math. One thing is clear: most businesses don’t have a pricing problem, they in fact have a value articulation problem. Pricing is not just about costs, competitors, or margins. It’s a direct reflection of your business strategy. The strongest pricing models are built on three core truths: 1️⃣ Customers don’t buy products. They buy perceived value. If your customers are haggling over price, the issue isn’t your pricing—it’s your positioning. The right customers will pay a premium if they see the impact. Price elasticity is not just a demand function; it’s a trust function. 2️⃣ Price is not a number. It’s a narrative. The reason luxury brands, SaaS companies, and airlines charge vastly different prices for essentially the same core offering? Storytelling. Pricing should reinforce your value proposition, not dilute it. 3️⃣ Data-driven pricing wins, but intuition refines it. A/B tests, willingness-to-pay surveys, and revenue models are great, but pricing is ultimately a human decision. Understanding psychological triggers (anchoring, decoy effects, bundling) separates a good pricing strategy from a great one. The best pricing leaders know when to listen to data and when to trust experience. 🚀 Pricing is the single biggest profit lever in any business. A 1% price improvement can yield a 10%+ profit increase, but only if done right. So the real question is: Are you pricing strategically, or are you just playing defense? Would love to hear your thoughts on what’s the most overlooked aspect of pricing in your industry? #PricingStrategy #BusinessGrowth #StrategyMatters #RevenueOptimization #CompetitiveAdvantage #ConsultingLife #BusinessConsulting #MarketStrategy #DataDrivenDecisionMaking #ValueBasedPricing #LeadershipInsights #FutureOfBusiness #SmartThinking #InnovationStrategy #CustomerPsychology

When I talk to #fractionalexecutives, I'm always befuddled when I ask them how they charge for their services because they give me a per-hour rate. But here's a thought - did you count your worth by the hour in your corporate roles? Would you ever consider a future employer paying you by the hour? Unlikely. Ironically, someone with years of experience, industry insights, and a proven track record of success suddenly falls into the trap of hourly billing. **The Hourly Trap** Hourly pricing, while straightforward, significantly undercuts the essence of what fractional executives offer. It binds your perceived value to the time spent rather than the impact created. This model limits your earning potential and misaligns client expectations, focusing on time over outcomes. Consider this: Compensation was never about the hours clocked in your corporate roles. It was about leadership, strategy, and the value you brought to the organization. Why, then, should you, as fractional executives, tether your worth to the ticking of a clock?  **Value-Based Pricing: The Way Forward** Value-based pricing stands out as a powerful alternative, emphasizing the outcomes and results of your work. This model aligns and encourages a deeper partnership, where the goal is not merely completing tasks but achieving significant, measurable business outcomes utilizing your genius and intellectual property. Adopting value-based pricing allows you to: - Highlight the strategic importance of your role. - Fosters a results-oriented approach to your engagements. - Ensure your compensation reflects the significant value you bring to an organization. However, value-based pricing requires shifting how you sell yourself to your prospects. It's about building trust by diagnosing, creating buyers' safety, and keeping in the forefront of your prospects' minds the outcomes they want vs. the benefits you bring. Create a pricing model and selling process that reflects the impact of your work. After all, the value you bring as a fractional executive is not measured by the hours you spend but by the outcomes they can achieve with your guidance. 

𝗣𝗥𝗜𝗖𝗘 𝗶𝘀 𝘁𝗵𝗲 𝗠𝗼𝘀𝘁 𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 ��𝗳 𝘁𝗵𝗲 𝟰𝗣𝘀 – 𝗔𝗻𝗱 𝗶𝘁'𝘀 𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝘄𝗵𝗮𝘁'𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗽𝗿𝗶𝗰𝗲 𝘀𝘁𝗶𝗰𝗸𝗲𝗿. Both decades of research work and almost any MMM modeling will consistently show that "Price" is a vastly more powerful driver of market response than anything done with advertising or messaging (Promotion) This is because there's a strong connection between active market demand and current market pricing. Shifts in perceived price can dramatically increase the demand for your product by activating latent market demand. --- But this can't be done by simply cutting your price in half because the purpose of the business is to make a profit! Many marketers have a naive view of price as being whatever's on the pricing sticker or the website pricing page. This is a TINY fraction of what the buyer perceives as the "cost" of acquisition. In B2B there are other costs that typically outstrip the initial direct price of the product. Such as: 1️⃣ The direct cost of acquisition (those folks in Legal red-lining your purchase agreement don't come for free) 2️⃣ The cost of installation 3️⃣ The cost of data migration 4️⃣ The cost of systems integration to other platforms 5️⃣ The cost of staff and training and adoption --- But there's also the even more powerful issue of cost-per-value! How does your buyer ACTUALLY perceive the utility they expect to get from your product? And how do they price that utility? For example...for exactly the same brand of beer, which is "cheaper": The one that costs $4 or one that costs $20? If you answered, "the $4 one", then you're not looking at the full picture. That $4 beer is one can...that $20 beer is a case of 24. It's about "value per unit of utility", not the sticker price! --- Almost 100% of ALL successful technology products are successful not because they are new or innovative but because the product has leveraged technology to fundamentally deliver massively more value for the overall TOTAL COST OF ACQUISITION. 👉 All successful technology plays are pricing plays! The classic example was the introduction of the Apple iPod. The iPod cost 1/3 more than the incumbent product (the Sony Discman), but NO ONE valued the iPod based on its retail sticker price. They valued it based on the problem it solved (which Apple brilliantly spotlighted) ➜ How many "songs in my pocket" at what price? Even at $400 vs. $300 for the Discman, the VALUE per unit of cost the iPod delivered was SEVENTY-FIVE TIMES greater. The Discman costs $30-per-per "song in your pocket" (and you needed a really BIG pocket) vs. the iPod, which costs merely 40¢-per-"song in your pocket...a 75x reduction on cost-per-unit-of-utility. And within four years, Apple has captured nearly 100% of the portable music device sector. The iPod was a MORE expensive product that won on a pure pricing play! This is the power of understanding what the 4Ps really mean and how to deploy that as marketers.

Ever struggled with value-based pricing? Here are 3 tips to make it easier for you: 1️⃣ Don’t stress about doing it “correctly.” People who teach value-based pricing—like me—often throw around techniques and mantras with fancy names: • Price anchoring • Multiple options • One-page proposals • Outcomes over outputs • “Price the customer, not the service” These sound like rules to follow. They’re not. They’re just tools. Use them when they help. Ignore them when they don’t. You can still be doing value-based pricing without following any of them. How? 2️⃣ Realize that, to a customer, every price is a value-based price. Let’s say I’m selling you a pen. I give you three price options: 1. $1, because the factory worker earns $20/hour and makes 20 pens per hour 2. $2, because it costs $1.60 to make and the company wants a 20% margin 3. $3, because this pen helps you capture ideas that could earn you at least $12 (a 300% ROI) All legit reasons. But what do you, the buyer, actually hear? Just the numbers: 1. $1 2. $2 3. $3 Unless there’s a meaningful difference, you’ll probably pick the cheapest one because each pen has the same value to you, regardless of whether the price was set using value-based pricing or not. Why? Because, to a customer, every price, regardless of methodology, has to answer one question: 3️⃣ The magic question: “is it worth it?” If you could pay $1 or $3 for the same thing, it’s probably more worth it to you to pay $1. Is there anything that might make you pay $3 for a pen instead of $1? The prerequisite is that the $3 pen has to be somehow DIFFERENT than the $1 pen. And that difference has to be worth it TO YOU. That difference might be because: • It looks cooler • The ink lasts 5× longer • It’s a brand you trust more • The salesperson flirted with you • It’s gold-plated so you can sell it for $15 • You won $5 playing the lottery today and feel like splurging Or a host of any other reasons. As the buyer, only you can decide which one or combinations of reasons are worth it. The seller can only suggest these reasons; they can’t set a value-based price until they know what you value. And people value different things. Now swap “pen” with “website” or “brand package” or whatever you sell. And put yourself in the seller’s shoes instead of the buyer’s shoes. Whether you’re doing value-based pricing or not doesn’t matter. Value-based just pricing means you talk to your buyer about the things that are important to them and try to understand that as thoroughly as possible. If you come up with a price that’s worth it for the buyer for THEIR reasons and you can make a profit delivering it at that price? Voilà! You’re doing value-based pricing.

Do you know the secret to turning customer value into revenue growth? Effective value pricing can help you maximize revenue and enhance customer satisfaction. Are you capturing the full value of your products or services? Why Value Pricing Works: 1. Customer Focus: Aligns pricing with the perceived value your customers receive. 2. Increased Revenue: Potential to charge higher prices for higher perceived value. 3. Market Differentiation: Distinguishes your offerings from competitors. Steps to Implement Value Pricing: 1. Understand Your Value: Identify what makes your product or service unique. What benefits do your customers gain? 2. Conduct Market Research: Analyze your competitors and understand what your target audience is willing to pay. 3. Segment Your Customers: Different customer segments may perceive different values. Tailor pricing strategies accordingly. 4. Communicate Value Clearly: Ensure your marketing highlights the unique benefits and superior value of your offering. 5. Monitor and Adjust: Regularly review pricing performance and be ready to make adjustments based on customer feedback and market changes. Focusing on effective value pricing can ensure that your prices reflect the true worth of your offerings, driving customer satisfaction and business growth. Start implementing these steps today to unlock your pricing potential.

How to Price AI Workflows Without Losing Clients The biggest shift you can make when selling AI workflows is moving to Value-Based Pricing. It stops the client from seeing your price as an expense and re-frames it as a profitable investment. Use this 5-step internal guide to ensure your pricing is always strategic and value-grounded: P → Prepare: Ground yourself in value and ROI. Focus on outcomes. R → Research: Fully map the manual process. This is your Discovery Phase. I → Identify the ROI: Calculate the monthly/annual savings. C → Communicate: Present the transformation first. Explain the solution, scope, QA, and client needs before presenting the price. E → Expand: Seek opportunities for continued engagement to establish a long-term partnership. → The Golden Rule: When presenting your price, you should be able to explain to the client exactly how you landed on that number and anchor it in ROI calculations. Once you deliver on that initial value, use the momentum to position yourself as an AI Partner/Consultant, not a freelancer. Full resource guide below, and link to the full video in the comments 👇

Every Saturday morning, I summarize and share a chapter of our book “Real Impact Marketing, 3rd edition. Capturing value, often via #pricing, is the final step after understanding customers, co-creating value, and communicating it. Value-based pricing sets prices based on the perceived value to the #customer, rather than solely on the seller's costs. The Apple iPhone example demonstrates this: charging a significant premium ($213) for larger memory that costs only $20 more to produce, reflecting the higher perceived value and willingness-to-pay of customers for more storage. Apple's strong pricing power allows it to capture a large share of industry profits. Achieving pricing #excellence through value-based pricing requires four key capabilities (the "House of Pricing"): 1.   Customer Data & Insights: Understanding customer value, benefits sought, willingness-to-pay, and segmenting accordingly (e.g., Swiss International Air Lines airfare pricing discriminating between direct vs. indirect flights; ORBITZ showing different hotel rankings to Mac vs. PC users). 2.   Economics: Understanding demand elasticity, costs (fixed, variable, sunk, avoidable, opportunity), and margins. The Barnes & Noble, Inc. example highlights the importance of considering sunk vs. avoidable costs and #opportunitycosts when pricing excess inventory. 3.   Price Management: Controlling pricing execution, particularly managing discounts and sales incentives. The #PriceWaterfall analysis (McKinsey & Company example) reveals "leakage" between list price and pocket price, helping identify and eliminate "stupid" discounts. 4.   #Psychology: Understanding how customers perceive prices and make decisions, considering fairness, negotiation tactics, and framing effects like anchoring. Experiments show anchoring effects in B2C (iPod gift choices) and #B2B (lawyer's fee estimation) scenarios. Digital Pricing uses technology to set and adjust prices dynamically based on real-time data. Its importance increases with customer data availability, large assortments, product perishability, purchase frequency, digital product usage (Adobe example), and low margins. Source: Michel/Duke (2022): Real Impact Marketing: Create a 1-page marketing plan, 3rd edition. ISBN 978-3907311035, available on Amazon as paperback, hardcover and e-book. If you like this post, follow me on LinkedIn. Go to my profile, click “follow”, click the bell icon, and click “all notifications”. If you think someone else would love to have this chapter for free, please repost.

Doctors say this all the time when they start offering services in consulting, coaching, or business. “I don’t know what to charge…” “Won’t they think I’m too expensive?” “What if they say no?” But here’s the truth: You’re not scared of pricing high. You’re scared of being rejected for seeing your own worth. Here’s what you need to understand: Companies don’t pay for time. They pay for outcomes, expertise, and risk reduction. So let’s make this practical. Use the 3V Framework to find what to charge: Value × Visibility × Validation Value → What financial/commercial value do you bring? ↳ Estimate how your expertise helps them make or save money ↳ Minimum pricing = 10–20% of that value Visibility → How known are you in your niche? ↳ High visibility = higher perceived credibility = higher rates ↳ If you’re not visible yet, build proof quickly (testimonials, mini case studies, content) Validation → What proof do you have that it works? ↳ Even 1–2 client results can 10x your confidence ↳ Start with pilot clients → measure impact → leverage for premium pricing Positioning is the difference between a £1,000 consultant …and a £10,000 trusted advisor. And once you master that positioning? You stop being “affordable”… …and start becoming in demand. P.S. Bonus Tip: Use the “Would I Say Yes to This?” Test. If someone offered you the same service, at your price, with your track record, would you say yes? If not, don’t drop the price. Add more value or more proof. P.P.S. Do you fear while charging more?