Pricing Tips
Pricing Tips

Tip 3: Simple Value Metrics

Simplifying value metrics is essential for creating a transparent and effective pricing strategy.

In this episode, our expert pricing specialist dissects the three key principles of clear value metrics: making it easy for customers to estimate their costs, streamlining internal billing enforcement, and thoughtfully incorporating secondary value metrics. With practical advice and engaging examples, this episode will guide you through the process of refining your value metrics, ultimately leading to better customer experiences and a more profitable business. Don't miss this essential episode on creating clarity in your pricing structure!

Welcome to 20 days of pricing tips—part 3. I’m Jordan, a member of the pricing team and I’ve worked on 25 different pricing projects. Today we're breaking down simplicity in value metrics.

Value metrics are the units by which you charge for your product. A common mistake we see is companies using really complicated value metrics. Doing so makes it hard for your customers to figure out how (and how much) they'll pay. Your sales team is more likely to take shortcuts when pricing deals. And your finance team might struggle to calculate and enforce accurate billing.

Here's a hint, if people inside your company struggle with your pricing structure, you can bet your customers experience even more frustration.

So, how should you think about your subscription's value metric? There are three key points:

(1) First, it should be easy for customers and prospects to quickly understand how they would pay and estimate how much they would pay for your product. If you've cooked up some unique, complex calculation, it's almost certainly driving away prospects.

(2) Second, internally, you should be able to easily determine and enforce the right billing for all customers. Otherwise, mistakes get made and customers may be upset.

(3) Lastly, secondary value metrics can be an incredibly powerful lever for growth and upgrades but they should be used thoughtfully. If customers need to consider 3 or more different measures to determine their price for your product, they're going to be confused.

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