4 enablers for effective pricing of innovations
1. Get the pricing discussion early in the innovation process !
Avoid thinking about pricing when the product is in the pre-launch process... Sounds normal, but how many of you are stil thinking about the price at the pre-launch process ?
We strongly recommend you to review your product innovation process (if not yet done) and embed the pricing discussions early in the innovation process - and I mean not just as part of the mini business case to get to to on the initial ideation, but as part of a pricing process quite a the start of the development project.
When there a a dead silence when your scrum (product) leader asks what the value is of each feature and if your customers are willing to pay for them, you are in trouble and you know it.
2. If you really want to have the perfect environment : avoid competition !
Think Yakult, Ipad, Alpro ; they al created new product categories, and they 'own' the category. They are price leaders by default. All the rest are 'a kind of', that sets them apart from the rest.
3. Make sure you have a process for value based pricing ...
Put your customers in the drivers seat and understand value (per segment) - and price on value (of course, value based pricing is not possible if you are a commodity, then you are probable stuck to cost-plus and you are in trouble - and you know it).
We strongly recommend you to make sure you have A PRICING PROCESS how to set a value based price in practice. Lacking a process (and the tools) is not an option.
4. Communicate your value.
The number one reason for price pressure ? Customers do not perceive our value...
In a recent survey (EPP European Pricing Research - 2012) : 60% of all b2b organisations said to doubt they have an effective value communication. Value communication is an important enabler to value capturing !
Need more inspiration ?
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