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My biggest challenge with value based pricing (VBP) was that it required an upfront discussion about the perceived value of the work, and my prospects/clients w
by warlog 7y ago
My biggest challenge with value based pricing (VBP) was that it required an upfront discussion about the perceived value of the work, and my prospects/clients were often totally in the dark about "value".
I don't think VBP works well for tech/biotech startups:
-founders/exec can't define value
-founders/execs are selling the dream (= infinite value) and don't want to pay for it.
-startups want to hire brains, but pay for hands
-founders/execs and especially managers want to focus on (minimizing) "costs", rather than unearthing or creating "value" with consultants.
[Edit: formatting]
- ghaff 7y agoYes, we worked for (or at least were paid primarily by) mostly old-line enterprise IT companies. We talked to plenty of startups. But they mostly couldn't/wouldn't afford us even when we had good personal relationships with the execs. ADDED: I do know at least one firm that does mostly value-based advisory work for small companies; their approach is to have a fair number of low dollar small clients in addition to some larger ones. As I said, even with the big cos, a good chunk of what we did was at least roughly day-based. At one point, for example, we experimented with trying to price more strategic advisory work higher than make-your-product-launch-deck-better type of work and it never really flew.