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Estd 4.22.2023
Based on the discussion in our pricing strategy book, Price to Scale, it is indeed viable to use multiple pricing axes when different customers derive value in different ways. However, there are a few important considerations to keep in mind:
• Clear Value Definitions: When your product provides value in more than one dimension, having multiple pricing axes can help align pricing with the specific benefits each customer segment receives. As detailed in the book, this approach requires a clear identification and articulation of the underlying value drivers so that each pricing element directly relates to the customer’s experience.
• Avoiding Complexity: While multiple pricing metrics can capture the granularity of customer value, it’s crucial to avoid overcomplicating the pricing structure. The book cautions against adding too many axes to the point where it confuses the customer. Simplicity in communication and rationale behind each pricing dimension is key to ensuring customers understand what they’re paying for.
• Segmentation and Alignment: The example of Newco in our book shows that when product lines serve different customer needs—like Networking vs. ITAM—it might make sense to have different metrics for each offering. This segmentation ensures that pricing remains appropriately aligned with the value delivered, rather than forcing a one-size-fits-all model that might not capture each segment's nuances.
• Practical Application: In practice, if you opt for multiple pricing axes, invest in clear documentation and communication. Use examples, case studies, or visual frameworks that elucidate how each axis corresponds to specific customer outcomes. This approach minimizes the risk of confusion, empowering customers to make informed decisions.
To summarize, while multiple pricing axes are a viable strategy for products with diverse value propositions, their success hinges on clarity, simplicity, and proper segmentation. By aligning each pricing metric with distinct value drivers and communicating effectively, you can capture the nuances of different customer needs without overwhelming them.