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How value-based pricing empowers sales teams?

by
in
Krzysztof (Kris) Szyszkiewicz
Head of Delivery, Partner
March 8, 2023
SaaS
value
pricing

The most beloved question among sales specialists and account managers is probably, “why is it so expensive?”. It’s a simple and often fair question that, depending on the answer, can either seal or kill the deal. 

In this article, we’ll talk about the sales approach that vastly increases the chance of success in such a scenario. In the next few paragraphs, we’ll answer questions such as:

  • What is value-based selling?
  • What are the benefits of the value-based selling technique?
  • What types of businesses can benefit from the method the most?
  • How to implement value-based selling?
    Value-based pricing as a gateway for value-based selling

Before we say anything about value-based selling, it’s only fair to take a few steps back and talk about value-based pricing, which is a foundation that vastly increases the chance of success of value-based selling. And here’s why. 

That’s fair, right?

Furthermore, there’s no value-based pricing without competition research and cost analysis. To learn, develop, and take advantage of the value-based selling strategy, you need to do all the necessary legwork, which includes defining value drivers, the next best alternative, and many more pieces of the puzzle. We explain more about the entire idea of value-based pricing in this article

So, the value-based pricing (and selling) approach is not the ultimate, only life-saver that will answer all your questions in terms of pricing. First, you need to thoroughly analyze all the costs and pay attention to the competition. Then, value-based principles will serve as a connective tissue that allows you to put all the pieces together and build pricing that works in your favor. 

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Value based-selling definition

Now, let’s focus on the topic at hand. Value-based selling is a logical consequence of value-based pricing and turns theory into practice (and, at the same time, profits). To be more precise, it’s a sales technique that focuses on presenting the value of a product or a service during the entire sales process. 

Of course, the difficult part is understanding clients’ needs and knowing what exactly they consider valuable about your product. And that’s why the technique can’t exist without the necessary previous steps. During the process of value-based pricing development, a company is learning about how the product will be used, what the alternatives are, and how exactly their solution fits clients and the market. 

We can take the most straightforward example from almost every company in the solar power industry. For a minute, let’s ignore the invasive style of outbound sales that many companies in the industry have, and let’s focus on the actual selling point, which is very simple and purely value-based. It usually works like this. 

First, we let the company know how much we pay for energy. Then, they calculate how many solar panels we need and how much money we will save over a period of time. Fair and square. Of course, the level of difficulty rises if a product or a service provides less tangible benefits. But the model remains the same. 

Lastly, we should point out that value-based selling can have the biggest impact in companies that rely on the account-based approach and other businesses in which sales teams play a significant role. In the case of self-service companies like e-commerces or SaaS with no enterprise plans, it won’t be as substantial. 

In most cases, it’ll help create more effective communication on the website. It will certainly increase conversion and willingness to pay, but it won’t be as impactful. 
Selling points write themselves (and other benefits)

The implementation of value-based pricing comes with a clear understanding of how a service or a product will be used and what value it will bring. And from there, you can easily form a list of selling points that emphasize that value. And if it’s possible and you have the necessary data, they can include the numbers such as:

- Hours that a tool/product might save
- Approximate cost reduction
- Any other type of tangible benefit

Another benefit is quicker conversion. By clicking all the right buttons and speaking the language of value to the client, you have a much better chance of closing the deal sooner rather than later. That saves your sales time and increases your revenue by simply increasing the number of sales in a given timeframe. 

Last but not least, it naturally increases willingness to pay (WTP). If you know for a fact how exactly your leads will profit from your solution, you can set the price accordingly and explain the logic behind it. 

Understanding value makes selling so much easier

Now, let’s get back to the most beloved sales question that we started this article with.

Why is it so expensive?

The answer really doesn’t have to be complicated. The value-based pricing process provides sales teams with a perspective and data to answer it in a detailed and exhaustive fashion.

Once you understand clients’ needs and how the product or service answers them, the process becomes smooth and easy. The most advanced companies even develop so-called battle cards that simplify the process even further and provide sales with guidance to value conversations.

Of course, getting there first is the biggest challenge. So, if you believe that the value-based approach will benefit your business (and your sales team), let us know. We’ll help you get there.

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Krzysztof (Kris) Szyszkiewicz
Head of Delivery, Partner

Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of ​​pricing and strategy.

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Krzysztof (Kris) Szyszkiewicz
Head of Delivery, Partner

Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of ​​pricing and strategy.