Towards the Realization of Value Pricing

ABSTRACT

Awareness of setting prices on services that respond to user benefits, or “value pricing”, is increasing primarily among IT companies. Regarding this, interviews with SEs and consultants and a consumer questionnaire survey on services were conducted. The findings are as follows.

1. With regards to professional services such as consulting and system integration (S.I.), value pricing at the contract stage is difficult under the present circumstances. This is because it is nearly impossible for both the customer and provider to quantify the benefits beforehand. Therefore, if value pricing is the objective, there is no choice but to pursue “result-reward”-type pricing.

2. A majority of service users also tend to think that “prices should reflect user benefits”. However, those who emphasize costs also represent a percentage that cannot be ignored.

3. Whether users think that “costs should be reflected” or “benefits should be reflected” depends on users’ attitudes of mind more so than their basic attributes. Users who emphasize encounters as well as those with significant perceived differences (users who feel there is a substantial difference in quality among service providing companies) tend to expect price to reflect benefits. This finding is with B-to-C services, but because it is a shared characteristic among different services, it is possible that it applies to B-to-B services as well.

4. Users who “emphasize encounters” or have “significant perceived differences” regarding one service tend to have similar feelings towards other services as well. As such, it is possible that the degree of emphasis on encounters and perceived differences are not limited to specific services, but rather they are a general attitude of mind. This general attitude of mind is valuable information in the sense that it can serve as a clue when wanting to know the attitude of a particular individual towards a specific service.