Value Function Price-Cost Leverage Market Value Pricing Ken Homa

Value Map P R I C E BENEFITS Many Few High Low VALUE FUNCTION VALUE SHORTFALL VALUE SURPLUS

Market Value Pricing High $ Value Low Few Many BENEFITS

Market Value Pricing High $ Value Low Few Many BENEFITS

Market Value Pricing High $ Value Cost Low Few Many BENEFITS

Market Value Pricing $ BENEFITS Value Surplus Value Cost High Low Few Many BENEFITS

Pricing Dynamics Demand sets the ceiling ... cost sets the floor PRICE CONSUMER PERCEPTION PRICE MARKET VALUE COST + PROFIT COMPETITIVE REFERENCE Demand sets the ceiling ... cost sets the floor

Market Value Pricing $ BENEFITS Value Cost High Max Unit Profit Max Share Low Few Many BENEFITS

Market Value Pricing $ BENEFITS Value Price Cost High Surplus Value ‘Unfair’ Profit Low Few Many BENEFITS

Market Value Pricing Rule of 20 and 2/3’s $ BENEFITS Value Cost High +20% 2/3’s Cost Low Few Many BENEFITS

Value Function Pricing Implications