During the last years, many industrial companies have invested greatly and introduced different smart services and digital products into their business. However, many companies are not able to run these offerings profitably, which is why many companies are re-thinking their business models. From our experience, the mismatch between the providers expectation's and the customer's willingness to use and pay for services, such as Predictive Maintenance, is strongly related to an unclear understanding of the value provided by these digital offerings.
Whereas in some cases, the value of digital products and services is unclear, often also their prices are not related to the benefits for the customer and restrain him from trying it out. Potential customers have consequently become sceptical when it comes to investing own resources in order to try out a new digital product. Hence, this development leads to the questions: What can companies do to overcome these barriers?
From our point of view, the key is to transform the revenue model away from cost-based or guess-based approaches towards value-based pricing models, where the price of a digital product is determined by the value created for the customer. However, the path towards value-based approaches is rocky. It is not only about implementing a new revenue model, with new pricing approaches and pricing metrics but also about quantifying a value for which often no pre-existing KPI's or value-drivers can be used as a reference. Overall, the transition towards value-based methods requires a deep transformation in all dimensions of how a company interacts with its customers.
In order to address these great challenges, our new consortium project “Pricing digital products” explores this topic systematically. On the one hand, the projects objective is to learn from “Successful Practice” companies that have successfully introduced value-based offerings and managed the transformation. On the other hand, we would like to individually support your company to find answers for the relevant questions needed to transform your organization successfully.
Currently, we are looking for consortium partners to join the our project. We are looking forward to getting in touch with you for additional information!