Impact Pricing Podcast

#555: Pricing Table Topics: 9 of Spades – There Is More Profit in Price Segmentation

This one is the 9 of Spades from the Impact Pricing card deck.

 There are two major rules in pricing that are hugely valuable to your organization. The first one is value-based pricing, which simply means charge what your customers are willing to pay. The second one is to adopt price segmentation.

Think about this for just a second. No two buyers actually are willing to pay the same price. Which means every buyer has a different willingness to pay. If we really want to adopt value-based pricing, at its best, then what we’re doing is trying to figure out, how do we get individual people to pay us what they’re willing to pay?

“No two buyers actually are willing to pay the same price. Which means every buyer has a different willingness to pay.”

– Mark Stiving

Of course, this is impossible to do perfectly, but it’s not impossible to say, hey, this type of person, this type of customer, gets more value from our product. They’re willing to pay more because they get more value. We see this all the time. 

For example, it could be that when we sell to Asia, they’re more price sensitive so they end up with a better price. And when we sell in the US or Europe, we end up charging higher prices. This is price segmentation and that’s where the value is.

There are several ways to do price segmentation. Those include understanding the characteristics of your customer. What information can you collect at the time of the transaction? And then, are there behaviors or hurdles you could put in their way so that those who are price sensitive are willing to jump that hurdle in order to get a better price. 

So, my advice, think very hard about, how do you do price segmentation? How can you charge different customers different amounts based on their willingness to pay?

We hope you enjoyed this example of Pricing Table Topics. What you just heard was done without a script.

If you have any questions or feedback, please email me, [email protected].

Now, go make an impact.

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Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

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