Monetisation · Pricing · Component
The value basis
The evidence about what the offer is worth to the customer, which is what a price should be set against.
The deliverable
What it is
Cost sets a floor and competitors set a reference, but neither sets a price. Only the value to the customer establishes what could be charged.
Value differs by segment, sometimes by an order of magnitude. A single price against a single value estimate averages across customers who are not alike.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
The value estimate
What the offer is worth to the customer, in their own units, per segment.
3 attributes: Estimated value · Segment · Source
LearnThe reference point
What the customer compares the price against when judging it.
3 attributes: Reference · Reference value · Source
LearnThe ceiling
The point beyond which the customer stops buying, and what determines it.
3 attributes: Ceiling · What sets it · Confidence
Learn
The ceiling is usually set by what a buyer can justify internally, not by what the offer is worth. That constraint is sometimes addressable.
The other components in pricing
The price list
What is charged, to whom, under what conditions — the actual list, including everything that varies from it.
LearnThe discount policy
Who may reduce price, by how much, and in exchange for what — written down, because unwritten policy is the widest policy.
Learn