Is true value-based pricing (charging each customer based on the ROI or outcome they get) actually achievable? How would we measure and verify each customer’s results to charge them accordingly?

Based on our saas pricing book, Price to Scale, the concept of charging each customer based strictly on the ROI or outcome they receive is appealing in theory but hard to execute in practice. Here are some key points from the book:

• True value-based pricing tied directly to ROI sounds attractive because it suggests customers pay in proportion to the benefits they receive. In theory, if you could measure the ROI accurately, your pricing could reflect a fair share of that value.

• The book explains that in practice, measuring ROI accurately is challenging. Factors like switching costs, productivity improvements, and softer benefits often complicate the math. Even if you use a well-paid consultant to estimate an ideal ROI, the real-world numbers at the end of the year might not match those estimates.

• As discussed in the book, this is why nearly none of the companies use ROI as the core of their pricing strategy. They tend to rely on more straightforward, repeatable metrics that indirectly capture customer value without having to validate every element of an ROI calculation.

• Implementing a true value-based pricing model would require very robust data collection and clear, measurable performance indicators for each customer—features that are difficult to standardize and verify at scale.

In summary, while true value-based pricing based on each customer's ROI has its theoretical merits, Price to Scale suggests that its practical implementation is fraught with challenges. Most companies opt for pricing models that balance value reflection with measurability and ease of verification.