(Source: Positive Tenacity)
- Value: This is the value your offering is creating and delivering to customers.
- Price: This is the price you charge and customers pay for to acquire or use your offering.
- Cost: This is the cost of creating and delivering your offering to the customer.
The differences between these elements create the benefits:
- The difference between Value and Price is the Customer Benefit
- The difference between Price and Cost is the Company Benefit
The wider the gap between V and P, the greater the benefit for the customer is and vice-versa. Same goes with the company benefit.
There are 3 actions your company can take to increase or decrease the benefit, and finding the right balance is really the key:
- Increasing Value: By developing richer features, launching new products, providing best practices and white papers, customer success and various service programs are all items that increase the value of your offering.
- Increasing/decreasing Price: Based on the position of your product, pricing model changes, increasing/decreasing switching costs, better documentation and guides all impact your pricing.
- Lowering Cost: Optimizing servers, reaching economy of scale, better brand/product awareness leading to lower cost of acquisition, better employer brand leading to easier talent attraction and better retention, all impact your overall costs.