Solution pricing is all about modularizing the value proposition. That is, break the solution down into smaller modules, and price them according to the customers’ willingness to pay. Customers typically focus on the main part of solution offers and are likely to pay more for the components surrounding this main offer.
A solution is a combination of products and services in a single offering. How can you price for all the components in your solution so that it is competitive and still optimize profitability? What's the right way to bundle the components so that the solution is easy to understand and so that customers will prefer it over the competition?
Selling solutions has traditionally been all about helping customers become operational as soon as possible after purchase. Solutions also make it easier for customers to select a useful combination of services and products without having to study all of the components of the offer in detail. Pricing for solutions has, on the other hand, mostly been focused on the deal itself and less on the value provided customers or on the solution’s long term benefits.
Understand the benefits of your solution and
charge for them.
Many solution providers also view their business as a pure product play, not realizing that the main benefit may lie in the services they may include at no charge in an attempt to increase product sales. As product pricing erodes and service costs increase, these companies find it difficult to maintain profitability.
Solution selling today requires an analysis of the customer’s business case. The price should be set based on the financial benefits accrued by the customer. Solution providers must understand the perceived financial benefits of the solution in order to practice value-based pricing. If not, the price is more often than not a guesstimate or a pure cost plus exercise.
PriceGain helps companies figure out the best way to price solutions. We help them understand customer needs, their clients’ business cases, and the real value of the solution. We translate that understanding into an optimized pricing strategy.
These are a few of the industries where PriceGain's experience can help solutions providers improve profits:
