5. Accounting for human behavior in pricing

Beyond financial considerations, you should also address customer risk and effort.

In the last four articles, we focused on gathering financial data for building a value calculator. Some people think getting the right price is all about financial calculations… but that’s not the case. Be sure to check out the last few slides in e-Module 8: Creating & Capturing Value at www.blueprintingcenter.com.  

This is where we introduce the human behavioral aspects of getting a top price. Specifically, you’ll see our CARE model:

• Confidence: The customers’ confidence in what you are claiming is critical to gaining higher pricing. It lets you capture a much larger part of the total value than if customers doubt you.
• Audience: Reaching the right audience is equally important. If you’re telling your story to a customer contact who doesn’t care, you’re wasting your breath.
• Risk: The more risk your customer must bear, the less they’ll be willing to pay.
• Effort: If buying your product requires more effort, that will reduce the price they’ll pay.

You’ll see a dozen specific suggestions for improving your position in these four. We especially find that reducing customer risk and effort are well-rewarded.

Keywords: value calculator, customer value, value calculator example, customer risk, customer effort, CARE model, confidence, audience, risk, effort