For Highly Profitable New Products & Services
Managers routinely underestimate the value of their new products and services by 100% or more! How do we know? Experience. With over 30 PriceSight™ implementations behind us one thing is clear: Managers leave millions in profits on the table because they don’t understand their customers’ willingness to pay. Price is the number one driver of business profitability. A 1% improvement in price capture translates into as much as 7% improvement in profitability for the typical tech company.
The following chart summarizes our experience with 6 typical clients. Across these 6 clients, managers’ initial price plans for their valuable new offerings underestimated their customers’ willingness to pay on average by a whopping 250%! These companies went on to successfully launch their offerings at the higher prices, substantially improving their profit performance.
PriceSight™ is a pricing research process that unites the efforts of R&D, Marketing, Pricing, Sales and Customers themselves to quantitatively determine willingness to pay. That alignment of constituencies is the success secret of our approach.
VPP works with R&D, Marketing and Pricing management to identify the differentiating benefits of the new offering. From there, we design the customer research instrument.
Then we engage with the sales and service organizations to deploy the survey. As a reference point, we ask these staff to complete the survey themselves. To experience the survey process, click on the link to take a sample survey: PriceSight™ Hotel Demo
From there, sales and service managers book appointments with customers. The survey can be completed onsite with a customer by simply handing them an iPad. Or the customer may complete the survey on their own device using a link.
VPP then accumulates the surveys, analyzes the results, and prepares a report of findings. Findings answer 3 critical questions:
- Which customers are interested in the new offering?
- What attributes, from the customer’s perspective, deliver the highest value?
- What is each customer willing to pay based on the value they perceive?
Benefits and Value
For Marketing and R&D the process identifies those offering attributes that are the highest value to customers, providing concrete input on design trade-offs and value prop. More, it provides reliable market segment information about who to target and why.
For Pricing the process provides concrete information about willingness to pay.
For Sales, the process identifies individual value buyers to target, the key value messages for those buyers, and the price those buyers will pay.