OnDemand WTP Pricing Research

A Lesson in Pricing | Gartner

We spend a lot time working with clients to help them identify sources of differentiation. In only rare occasions do we see a client differentiate on having the lowest price. So provider pricing can be a bit of an art form. Software pricing is relatively fungible in that the marginal cost of the software is extremely low (although that doesn’t account for support costs). And there are certainly tangible costs when it comes to manufacturing hardware or providing cloud or professional services.

But we still see clear mistakes made around pricing. Some of it comes down to efficiency and a desire to make a certain margin despite that inefficiency and despite what the market wants to pay for a solution. But there are also clear examples that align more with the mentality of the property seller, especially when it comes to services. It usually stems from the idea that someone’s expertise or methodology is “worth more” and thus should be priced at a premium. The problem is that the market doesn’t always value these things. Buyers purchase solutions to achieve specific business outcomes. If your solutions (including services) don’t help better or more quickly achieve those outcomes, they aren’t going to pay more for them, especially when there are lower-priced alternatives.

Services are a perfect example. If you look at any particular technology, there are potentially dozens of providers that offer implementation, configuration and training services. Many of them do it at prices that are significantly less than the professional services staff of the solution provider.

So it’s worth looking at your pricing to see whether you are providing fair value (as defined by the market) for the solutions you are providing. If you are a Gartner client (who has purchased a PMM product), you can also work with our analysts to better understand pricing trends and competitive prices.

Read complete article here:

A Lesson in Pricing.

1 Comment on "A Lesson in Pricing | Gartner"

Trackback | Comments RSS Feed

Post a Comment

WP-SpamFree by Pole Position Marketing