Harry Macdivitt - Value-Based Pricing: Drive Sales and Boost Your Bottom Line by Creating, Communicating and Capturing Customer Value

Value-Based PRICING

Drive Sales and Boost Your Bottom Line by Creating, Communicating, and Capturing Customer Value

Harry Macdivitt and Mike Wilkinson

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-176860-3
MHID: 0-07-176860-2

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To Aileen and Lizzie
For their patience and support, and not insisting
that all these little DIY jobs get done. Ever.

There is a wonderful saying in Scotland that twa heids are better than yin (two heads are better than one). We have been privileged to meet, in the course of the three years it has taken us to write this book, some really marvelous people and to have the benefit of their critical but kind comments. We truly have discovered that a hunnert heids are better than twa (a hundred heads are better than two). The twa in this case being the authors. So to everyone who has contributed in one way or another to the writing and content of this book, we offer a big, collective thank you.

We would like to single out for special thanks a number of individual.

Our colleagues Ricki Coussins and Professor Ian Thomas kindly offered some suggestions and ideas when looking over drafts of early chapters. We acknowledge their contributions with thanks. Thanks are also due to a colleague of many years, Roy H. Hill, who kindly agreed to make available some material on contribution analysis that appears in . Our good friend and colleague Jack Matton has consistently offered good ideas, suggestions, and valuable criticisms based on his enormous experience in value work and led us in fact to make some very substantial changes to the running order and content of this book. Thanks, Jack, and keep working on that handicap! We owe a big thank you also to Barry Rodger, professor of law at the University of Strathclyde, for checking over the final draft of Appendix A.

Harrys daughter, Laura, applied her eye for detail in reviewing several chapters of this book and for working her magic on many of the graphicsusually at the end of a long day as a copy editor. Thank you, Laura.

In the course of preparing , we interviewed executives from a number of companies who had progressed some distance along the VBP journey or who provided content and ideas for other cases. We have promised to keep their companies confidential, but we mention them here again with our thanks for the time they spent with us and for the insights they gave us from their experience. So John, Simon, Frederic, Gary, Roland, Alan, Phil, Tom, Steve, and Marcus, you know who you are. Thank you.

Finally, we would like to express our appreciation to Niki Papa-dopoulos at McGraw-Hill for both her wise counsel, particularly in the final stages of preparing the manuscript and for actually believing that it would arrive. Eventually. We very much appreciate and acknowledge the carefulin fact, meticulousediting of our scribblings, translating them into American English, and imposing a solid logical flow to our arguments by McGraw Hills editing team Ron and Joseph Martirano and Jospeh Kurtz. In fact, Ron and Joseph helped us turn our prose into a real book. Thank you, guys!

Over many years, we have met thousands of managers from hundreds of companies. We have met them on courses, at seminars, at management and board room briefings, in consulting projects, and at conferences. We also want to acknowledge the insights and ideas offered freely by participants in special interest groups on the Web. It is truly fascinating to realize that so many people across the planet are so deeply interested in pricing in general and in value-based pricing in particular and are willing to share their ideas and insights with fellow professionals. We never cease to be amazed at the interest that people have in our ideas on pricing and value, and always we come away from events and discussions with some exciting new concept or idea. They are too many to mention by name, but they genuinely have contributed in some way or another to the ideas in this book. We have written this book for them and those many souls who, like them, are grappling daily with tough challenges.