Ed Arnold, founder and managing partner at The Valorizer, brings decades of hands-on experience building customer value models, teaching value conversations, and guiding companies toward value-based pricing. After working directly with Tom Nagle at Monitor Group and leading value initiatives at LeveragePoint, Forrester, and Ibbaka, Ed has become one of the most respected practitioners of Economic Value Estimation (EVE) in B2B.
In this episode, Ed and Mark dive deep into what “value” actually means, why B2B buyers define it differently than sellers, and how to quantify economic outcomes in a way that withstands scrutiny. They debate value vs. willingness to pay, unpack why value stories outperform case studies, and explore how real conversations—not spreadsheets—unlock premium pricing.
Podcast: Play in new window | Download
Why you have to check out today’s podcast:
- Master the real meaning of “value” in B2B—and why most companies still get it wrong.
- Discover how to run a value conversation that reveals economic impact and customer priorities.
- Learn how to turn EVE models into persuasive value stories your buyers can resell internally.
“You need to quantify the value of the product you’re selling—and you need to talk to customers about that to understand it and write their value story.“
– Ed Arnold
Topics Covered:
05:09 – Value Perception in B2B: Why Customers Decide with Both Logic and Emotion
08:34 – Value vs. Willingness to Pay: The Debate Begins
12:06 – Why Willingness to Pay Is Not Value (And What It Actually Measures)
19:04 – Value Perception in B2B Sales: Influence, Trust, and Risk
20:41 – Value Is Always Relative (And Why Alternative Choices Change Everything)
24:26 – Value-Based vs. Competitor Pricing: Why They Aren’t the Same Thing
28:03 – Value Story vs. Case Study: What Buyers Actually Need to Make Decisions
32:47– Quantifying Product Value: How to Build a Story Buyers Can Take to Their Executives
Key Takeaways:
“Value comes from use, not purchase.” — Ed Arnold
“Willingness to pay is not value, if it were, we’d never talk about leaving money on the table.” — Ed Arnold
“In B2B, value is 80% logic, 20% emotion.” — Ed Arnold
“A value story is customized. A case study is generic.” — Ed Arnold
“You can’t build a value story without having a value conversation first.” — Ed Arnold
“Sometimes the value model reveals there simply isn’t a differentiated advantage—and you have to accept that.” — Ed Arnold
Resources and People Mentioned:
- Tom Nagle: https://www.linkedin.com/in/thomas-tom-nagle
- LeveragePoint: https://www.leveragepoint.com/
- Reed Holden: https://www.linkedin.com/in/reed-holden-913ab69/
Connect with Ed Arnold:
- LinkedIn: https://www.linkedin.com/in/edarnold1/
- Newsletter: https://edarnold1.substack.com/
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Ed Arnold
You need to quantify the value of the product that you’re selling, and you need to talk to customers about that to understand it and to write their value story.
[Intro / Ad]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the misunderstood relationship between them. I’m Mark Stiving, and I run bootcamps to help companies get paid more. Our guest today is Ed Arnold. Here are three things you want to know about Ed before we start. He is the founder and managing partner at The Valorizer.
Probably my favorite thing, or the thing I’m most jealous of, he worked with Tom Nagel at The Monitor Group. And he previously led value and pricing work at Ibbaka, LeveragePoint, and Forrester. What a who’s who. Oh, and he also recently published the Customer Value Playbook, which we’re probably going to talk about today. Welcome, Ed.
Ed Arnold
Thanks, Mark. Great to be with you again.
Mark Stiving
How did you get into pricing? Remind us. I’m sure I asked you this last time you were on.
Ed Arnold
I’ll give you a quick recap. In 2008, I had an opportunity to start a company called LeveragePoint, which was the first SaaS customer value management platform, which created a category. That work was based on Tom Nagel’s book The Strategy and Tactics of Pricing. From that experience—about ten years—I became very good at developing what Nagel calls EVE models, economic value estimation models, because I had to help clients build them.
That’s what LeveragePoint was. They used those models to set price and in value selling. By virtue of doing this hundreds of times, I became really good at quantifying value and understanding how different companies use it. Since then, I’ve been using it in product leadership roles and now as a consultant.
Mark Stiving
Excellent. I find this concept of value so fascinating. And by the way, I want to make a caveat to our listeners. I think Ed and I think alike 99% of the time. So I’m going to look for things to disagree with him about just so we can have a good conversation. There were things in his new ebook that made me think: oh, that was really good, and other things where I thought, no, I wouldn’t have said it that way. But great. Let’s dive in.
Ed Arnold
Let’s talk about the ebook, because I’d love to get more people aware of it.
Mark Stiving
Well, so I’m going to pop into page seven of the ebook, and you’ve defined value in page 7. I have to tell you, that’s probably the one thing I’m most unhappy about. I don’t like the definition. Let me read it.
Number one: “Whatever the customer thinks it is.” True, but not useful.
A combination of 80% logic, 20% emotion for B2B products. I agree with that, but it still doesn’t answer how we use it.
Primarily an economic argument accepted by the customer in terms of potential margin gain from cost savings, revenue growth, and asset efficiency. I agree with that if we’re talking only B2B and not personas or individual buyers inside a company.
Ed Arnold
Not sure I completely agree. If you’re looking at the holistic financial health of the company, the definition fits. But individuals have their own agendas. I’m glad you made the distinction between B2B and B2C. They’re different animals. In B2B, especially selling complex solutions, you must talk to multiple people at the customer company. One thing I learned early is that procurement is not your main stakeholder.
Mark Stiving
Yes.
Ed Arnold
Let’s talk about the perception piece—the first part—because that’s an interesting topic.
Mark Stiving
Go ahead.
Ed Arnold
When you’re trying to understand value, you have to accept that customers have their own ideas of what value is. Some people think value is a scientifically proven concept—that you can measure it and say the value is exactly 18.35. It’s not. Economics is a social science. Human behavior is not rational. Perception is it.
Perception is dynamic. What I find valuable changes from minute to minute depending on mood and circumstances. For businesses, that’s also true. Perception can be influenced. That’s why I think the idea that “customers’ perceptions can be influenced” is useful. It guides how you position your product on value.
When we started at LeveragePoint, clients wanted the number—the meaning of the universe from Hitchhiker’s Guide. They thought if they had the number, everything would align. It’s not like that. Value is something you must make the case for.
Mark Stiving
As you describe it, those are the first two of my three tenets of context-driven pricing. But I use the phrase “willingness to pay” instead of value. I say willingness to pay is contextual. Willingness to pay is malleable—we can influence it. Here’s the question: how do you differentiate value from willingness to pay?
Ed Arnold
Great question. Some people say they’re the same. Having shaken Tom Nagel’s hand—if he heard that, he’d have a fit. Willingness to pay is not equal to customer value. If that were true, “leaving money on the table” wouldn’t exist.
Often, what willingness to pay really is… is willingness to sell. It’s where the salesperson bails out. Willingness to pay equals selling price or average realized price. What it tells you is how much value you captured. Did you give away value?
Mark Stiving
I don’t think you’re quite right, but close. I think willingness to pay is a number. It isn’t the same for every person. You have a willingness to pay for a refrigerator; you may not know it, but you have it. It might be $5,000. If the store price is $1,000, you’ll pay $1,000. That’s not the value of it.
Ed Arnold
Totally. As a consumer, “value” is getting a good deal. But that isn’t what we mean in pricing. When we talk about willingness to pay, we’re talking about negotiating. People adopt postures. You never truly know willingness to pay in a negotiation.
Mark Stiving
I agree completely. And the reason I prefer “willingness to pay” is because pricing people can’t agree on the definition of value.
Ed Arnold
Technically, we should agree. Nagel provides the classic definition: utility. Value comes from use. You use a product; you measure the value.
Mark Stiving
That line—value comes from use, not purchase—was one of my favorite sentences in your book.
Ed Arnold
There are psychological factors, and Nagel talks about that. He would say EVE does not give you a price; it gives you a range of possible prices out of your differentiated value. Assuming buyer and seller agree on the value—which is a whole topic—the question becomes: what’s a fair split? Fifty–fifty feels fair, but from a buyer’s perspective, that’s not fair. So it’s usually somewhere below 50%. It can’t be zero because then your differentiation isn’t valued. Something determines that split.
Nagel talks about measuring risk. If it’s a risky decision, buyers are less willing to pay. If switching costs are high, less willing to pay. If they trust the brand or the salesperson—your example—they’re more willing. That’s how Nagel adjusts the psychological or emotional aspect. That’s why I say in B2B, value is 80% logic and 20% psychology. That’s where those factors fit.
When I work with customers, my passion is making this accessible to the average person, not just pricing experts. First, you need a good idea of the value. You must ensure customers understand and agree. Often, they don’t. They might say, “I only agree with half of it.” Fine. Maybe we quantified $100,000 of value; the customer accepts $50,000. Now: how much of that $50,000 are you paying me for delivering it?
That’s where willingness-to-pay factors come in. If the buyer says, “We’re your first customer—too risky”—you give away value. But once you understand these parameters, you can design pricing strategies: offer lower first-year prices, require reference commitments, use gives-and-gets. The value is what you parlay to make the sale.
Mark Stiving
One thing you say, and I love the phrase, is that in B2B it’s 80% logic, 20% emotion. I think of the 80% as the value side and the 20% as behavioral economics.
Ed Arnold
Exactly. In B2C it flips—80% emotional, 20% logic. That’s why advertising exists. Commercials often have nothing to do with the product—just imagery and emotion.
Mark Stiving
Stuff engineers don’t get.
Ed Arnold
Right. But somehow it’s alluring. “I really need a huge pickup truck so I can drive up a mountain.” It makes no economic sense, but I want one.
Mark Stiving
I absolutely do. It’s amazing. I had eight notes here and I think we made it through one.
Ed Arnold
Maybe a part two—or maybe this isn’t a good discussion.
Mark Stiving
No, it’s fascinating. The definition of value is the biggest challenge we have in our industry. It means too many things to too many people.
Ed Arnold
Totally agree. That’s what I try to do—make it practical.
Mark Stiving
I also loved your phrase: “Value comes from use, not purchase.”
Let’s jump to “value is always relative.” When I first read that, I disagreed, then thought more and realized it’s right. The way I teach it: there’s inherent value (comparing a solution to status quo), and relative value (comparing products to competitors). If it’s status quo, I’m asking: what’s the value of solving the problem? If comparing to competitors, I’m asking: what’s the value of differentiation?
Ed Arnold
I agree. That comes from Nagel’s EVE technique, where you use a reference price plus differentiation. But what if there’s no reference? If it’s a brand-new solution, what are you comparing against? There’s always an alternative—manual work, part-time workers, a workaround. That appears in the value drivers.
When talking to a customer about value, you must understand what they’re comparing you to. If it’s head-to-head, the differentiation margin gets thin. People throw in intangible value—“our brand is worth a million dollars.” You must work through that. Intangibles matter only if someone pays for them.
Philosophically, we agree. There’s always an alternative—even doing nothing.
Mark Stiving
Given that, I want to skip to page 26—pricing strategy types. I used to teach cost-plus, competitor-based, and value-based pricing. Every time, I felt like I was lying. Value-based pricing still references competitor prices. If I’m 20% better, I charge 20% more. If the competitor raises their price, I raise mine. Even in value-based pricing, I’m using competitor prices as reference. What do you think?
Ed Arnold
Interesting take. I haven’t thought of it that way. Where I was going: these are philosophies of how you price. There are many variations—usage-based, outcome-based, etc. But philosophically, competitor-based pricing is “there’s a leader and I want to undersell slightly.” Whatever they charge, I’ll charge less. Value plays no role—just “buy us, we’re cheaper.”
Value-based pricing focuses on what the customer gets. Competitor-based pricing is usually discount-driven. Value-based pricing is often premium-driven—but not always. I’ve created value models where the client had competitive disadvantage. It happens. Then value-based pricing doesn’t work. You must repackage, cut costs, find a new market, or reposition.
Mark Stiving
It’s horrible to tell a client they don’t have value.
Ed Arnold
It is. Some think value is a magic bullet. Sometimes you’re working with clients who shouldn’t be touching value—they’re desperate.
Mark Stiving
You frequently talk about value stories. I love the hero’s-journey model. What’s the difference between a value story and a case study?
Ed Arnold
A value story is customized for a particular client you’re selling to. It’s personalized. A case study is generic—real or fictitious. At Forrester, we did TEI case studies—a mashup of three or four clients. A value story applies a value model to a specific customer situation.
Mark Stiving
That’s not what I expected. If a value story is personalized, how do I tell it without having a value conversation?
Ed Arnold
You can’t. You must have the value conversation. You don’t start from a blank page—you start with assumptions: “Here’s what we think you’re experiencing.” Then you confirm or correct. You connect the dots between what your product offers and what the customer cares about. You find the economic impact.
A value model may have six or seven potential economic drivers. Not all apply to all customers. You figure out which matter to which stakeholder. Then rinse and repeat for other stakeholders. You end with four quantified reasons showing how you improve their business. That becomes their internal business case.
Mark Stiving
We’re far over time, but I’ll ask the final question. What’s one piece of pricing advice you’d give listeners?
Ed Arnold
You need to quantify the value of the product you’re selling. You need to talk to customers to understand it and write their value story.
Mark Stiving
Because not only do you not understand how much value they get—they definitely don’t.
Ed Arnold
Exactly. They need to influence their executives, too. The larger the deal, the more scrutiny. You must be on solid footing.
Mark Stiving
Ed, thank you. How can people contact you?
Ed Arnold
LinkedIn. Connect with me there. There’s also a link to the Valorizer newsletter, which is free. If you upgrade, you get the ebook.
Mark Stiving
Nice. To our listeners: If you enjoyed this, please leave a rating and review. If your company wants to get paid more for the value you deliver, email me at [email protected]. Now go make an impact.
[Ad / Outro]
