Value-based pricing – pricing a product or service according to its value to the customer rather than its cost – is the most effective and profitable pricing strategy. Value First, Then Price is an innovative collection that proposes a quantitative methodology to value pricing and road-tests this methodology through a wide variety of real-life industrial and B2B cases.
This book offers a state-of-the art and best practice overview of how leading companies quantify and document value to customers. In doing so, it provides students and researchers with a method by which to draw invaluable data-driven conclusions, and gives sales and marketing managers the theories and best practices they need to quantify the value of their products and services to industrial and B2B purchasers. The 2nd edition of this highly-regarded text has been updated in line with current research and practice, offering three new chapters covering new case studies and best practice examples of quantified value propositions, the future of value quantification, and value quantification for intangibles.
With contributions from global industry experts this book combines cutting edge research on value quantification and value quantification capabilities with real-life, practical examples. It is essential reading for postgraduate students in Sales and Marketing with an interest in Pricing Strategy, sales and pricing specialists, as well as business strategists, in both research and practice.
Part I: Introduction
Andreas Hinterhuber and Todd C. Snelgrove
Part 2: Selling Value: Value Quantification Capabilities
2. Value First, Then Price: The New Paradigm of B2B Buying and Selling
Andreas Hinterhuber, Todd C. Snelgrove and Bo-Inge Stensson
3. Interview: Processes and capabilities for value quantification
Robert Russell and Andreas Hinterhuber
4. Muddling through on Customer Value in Business Markets?
Todd C. Snelgrove and James C. Anderson
5. Interview: Nurturing value quantification capabilities in Strategic Account Managers
Andreas Hinterhuber, Todd C. Snelgrove and Bernard L. Quancard
6. Salesforce Confidence and Proficiency: The Main Cornerstone of Effective Customer Value Management
Part III: Selling Value: Best Practices in Value Quantification
7. Value quantification: Processes and best practices to document and quantify value in B2B
8. Quantifying your value so customers are willing and able to pay for it
Todd C. Snelgrove
9. An inside-look at value quantification of competitive advantages: how industry leaders prove value to their customers
10. Value quantification for services
Todd C. Snelgrove
11. Quantifying intangible benefits: best practices to increase willingness to pay while creating longer-lasting customer relationships
Evandro Pollono and Paolo De Angeli
12. Towards a shared understanding of value in B2B exchange: Discovering, selecting, quantifying, and sharing value
Pekka Töytäri and Risto Rajala
Part IV: Buying on Value: Value Quantification and B2B Purchasing
13. Value first, cost later: Total Value Contribution as a new approach to sourcing decisions
John V. Gray, Susan Helper and Beverly Osborn
14. Interview: Selling value to purchasing
Todd C. Snelgrove and Bo-Inge Stensson
15. Using Best Value to Get the Best Bottom Line
16. Value Selling: The crucial importance of access to decision makers from the procurement perspective
17. The Sourcing Continuum to Achieve Collaboration and Value
Part V: Value Quantification and Organizational Change Management
18. Interview: Implementing value quantification in B2B
Andreas Hinterhuber and Matthias Heutger
19. Interview: The ring of truth - value quantification in B2B services
Andreas Hinterhuber and Pascal Kemps
Part VI: Buying and Selling on Value: Value Quantification Tools
20. A Question of Value: Customer Value Mapping versus Economic Value Modeling
Thomas T. Nagle and Gerald Smith
21. Why start-ups should consider using value propositions
Lennart Foos and Markus Kirchberger
22. Creating and Sustaining Competitive Advantage Through Documented Total Cost Savings
Part VII: Epilogue
23. A call to action: value quantification in B2B buying and selling
Todd C. Snelgrove
24. Quotes and Statistics to Help you on Your Value Selling Journey
Todd C. Snelgrove
25. The Present and Future of Value Quantification
Andreas Hinterhuber and Todd C. Snelgrove
"A ‘must read’ for any B2B marketer. These seminal cases not only illuminate the essentials of value based business marketing, but with detailed examples show you how to implement a value based approach in the turbulent world of today’s business market. Real, Good, Practical stuff from professionals who’ve done it."
Ralph A. Oliva, Director, Institute for the Study of Business Markets and Professor of Marketing, Smeal College of Business, Penn State University, USA
"By combining an impressive list of expert analysts with real-world case studies, Value First, Then Price gives businesses the latest strategies and tactics needed to improve company margins and profit performance. Because the focus here is on customer quantifiable values, the book correctly shifts emphasis from a producer’s features to an end-user’s benefits."
Kevin Mitchell, President, The Professional Pricing Society, Inc.
"Todd Snelgrove’s description and measurement of a new view on Total Cost of Ownership (TCO), a more holistic measurement focused around Cost, Benefit, and Value called Total Profit Added™ (TPA) is a great step in the evolution of enabling both buyers and sellers to make the right decisions based on best value not lowest price."
Thomas Choi, Professor, Arizona State University and Executive Director, Center for Advanced Procurement Studies
"Recent research shows that far less value (and cost reduction) is achieved through traditional negotiation than can be gained through understanding markets, needs and opportunities for creative collaboration. If you care about business and personal success, value must be your priority."
Tim Cummins, President, World Commerce and Contracting
"The war for value is today’s biggest business challenge. Value First, Then Price is an invaluable, thought-provoking guide to this debate."
Nigel Barlow, International Consultant on Innovation and Value
"In our work with some of the world’s industrial manufacturers, we’ve seen that companies that focus on value from both the buy and sell side enjoy a competitive edge. Top-performing industrials are eight times more likely to take a value-based approach toward pricing, and companies that measure and buy based on total cost of ownership are 35% more profitable. Buyers have never been better informed on the total cost of ownership, and companies that are still talking about features and benefits are getting left behind."
Stephen Gold, CEO of MAPI—Manufacturers Alliance for Productivity & Innovation
"My own research confirms McKinsey’s, that only 5% of companies have value propositions. No wonder buyers have the upper hand! The world really needs this book and I congratulate Andreas Hinterhuber and Todd Snelgrove on putting together a truly fantastic piece of work."
Malcolm McDonald, MA (Oxon) MSc PhD DLitt DSc, Emeritus Professor, Cranfield University School of Management, UK
"In business-to-business markets, managers must bridge the gap between those who say that it is only by value that firms can thrive in the long term and those who suggest that buyers will buy on price. Value can be created and captured. The bad news is that it is extremely difficult, but the good news is that a systematic approach is likely to yield dividends. In this important book Andreas Hinterhuber and Todd Snelgrove have harnessed the world’s top value creation experts to provide an insightful and complete roadmap."
John Roberts, Fellow, London Business School, UK and Professor, University of New South Wales, Australia
"What a comprehensive way to present value. From the discussions to the articles, a must have guide for professionals and companies that want to buy, produce and sell any product or services based on value."
João Ricciarelli, Executive President America's, Leadec
"It’s not often you read a business book, learn from it and have fun doing so. Value First, Then Price by Hinterhuber and Snelgrove is one of those rare exceptions. I don’t care whether you are on the buy or sell side of the equation, this book is for you. It is a fantastic engaging read. The material is thought provoking with great integration of theory: from value, to ROI and results. It is simply a very practical business book."
Stephen Kozicki is on the Advisory Panel for HBR and lectures at business schools including Macquarie University, University of Technology and The Australian Catholic University, Australia
"Much has been said and written about value in industrial markets. But how to put the idea to practice? This book focuses on what matters most: to 'challenge' customers and help them rethink their assumptions, vendors need data and value quantification. The authors provide a practical, hands-on roadmap for value pricing that both buyers and sellers can follow for achieving better business results."
Wolfgang Ulaga, Senior Affiliate Professor of Marketing, INSEAD, France
"Value First, Then Price is a much-needed work and deserves a place in most CPO and sales offices."
Keld Jensen, Author of ‘The Trust Factor—Negotiating in SMARTnership’, Professor and Advisor in Negotiations
"SAMA research emphasizes that most companies are significantly lacking in internal processes for value-based negotiation, value creation, value-based pricing and value monetization. Snelgrove and Hinterhuber provide great insights and methodologies for companies to fill these gaps."
Bernard Quancard, Retired President and CEO Strategic Account Management Association (SAMA)
"Quantifying and understanding the value proposition is key to business success. This book gets directly to the bottom line by taking both a buyer and seller perspective and presenting value based purchasing in a way that all purchasing professionals need to understand."
Wendy L. Tate, PhD, Associate Professor of Supply Chain Management, University of Tennessee, USA
"Value First, Then Price is a timely and rare contribution, providing not only invaluable insights, but also a practical methodology of how to perceive, quantify and capture value. From the perspective of emerging and new market economies, it offers the ultimate answer on how to escape the enduring 'lower cost—lower price' trap, and how to shift towards a sustainable, value creation driven path that leads to business and economic development."
Modestas Gelbūda, PhD in International Business, Aalborg University, Denmark; Managing Director, Baltic Institute for Leadership Development, Lithuania and Associate Professor, ISM University of Management and Economics, Lithuania
"At a time when both customers and suppliers are over focused on product prices as a determinant of business transactions, this book offers a fresh way out by arguing for a new way of looking at the economics of exchange between buyers and sellers where price is just one element in determining the true value of what is bought and sold. More specifically, the book informs purchasing officers about the often ignored actual cost and inherent value (in total savings, returns on investment, etc.) of what they buy, and provides suppliers with tools to quantify and communicate the hidden value in what they sell. I highly recommend this book to professionals in procurement, sales and marketing, and general management."
Kamran Kashani, IMD, Switzerland
"The Editors and their authors have tackled a problem that has faced buyers and sellers for years: how to define the concept of value that aligns with two different views of the world. Sales claims to sell based on value, and purchasing claims to buy based on value, yet both parties view this concept from fundamentally different viewpoints. This book articulates these differences, and creates a framework that can help resolve the issues, creating a mutually compatible lens for understanding this often misunderstood concept."
Robert Handfield, Bank of America, Distinguished Professor of Supply Chain Management and Director of Supply Chain Resource Cooperative, North Carolina State University, USA