Value proposition, the vital challenge
To me, value proposition is simply the value a customer receives when buying a product and/or service. It applies to both new business and to servicing existing customers. A business has to create this value proposition for its customers and make sure that the value proposition is viable and sustainable.
How do we translate the concept into our pricing models and offerings?
The subject is broad and deep, so for purposes of this blog, I will focus on the strategy we are taking as we consider the commercial pricing for MyProjectTracker.
So how much to charge to give value?
The correct answer is “As much as someone is willing to pay”. That’s all very well, but what happens if you are in the situation where you really are simply not sure.
For us, we had lots of on-line references we could check out to see what they were charging. This gave us a bit of a start, but was it the correct value? Some of our features are richer than those of our competition, some are less rich – how were we to ascribe value?
Frankly, we were a bit lost! So we did what anyone should do when you feel like this, we did a survey and asked our potential customers. And guess what? They all came back with what they deemed as fair product value. Not surprisingly, the numbers that were entered pretty much came out in the same kind of area as our expected competition.
We then looked at the opportunity for our customers in terms of time saved and more effective management. Feedback from a number of our potential customers estimate that the product will be save around 3 man days/month in efficiencies for their companies. That has to be worth around EUR750+ which will give a return on investment within a couple of hours use a month.
So we hope that we will be providing good value in our product. The next question is how to maintain that value vs the competition. This is where the intangibles come into play; customer service, staying on top of the product capabilities and releasing relevant product modules/services into the market, ensuring that the team lives and breathes the customer – pretty standard stuff really, but amazingly forgotten by many.
Have you asked yourself recently “do I over a good value proposition and does it relate to existing as well as new customers?”. Both are equally important!
Photo : wetwebwork
Tags: business management, customer feedback, market research, marketing, MyProjectTracker.com, value proposition
