Value-Based Pricing & Google

Value-based pricing is all about aligning what customers get with what they pay. In the case of Google’s cost-per-click advertising, you only pay if your ad gets clicked on. That’s also when Google earns revenue. So there is an alignment of objectives: the advertiser wants clicks and Google wants revenue.

By the way, value-based pricing is not a new pricing paradigm or methodology. Oscar Wilde famously said that:

“A cynic is a person who knows the price of everything and the value of nothing”

Adam Smith also talked about value as early as page 24 of his 1776 book “The Wealth of Nations”:

“The word value…has two different meanings….sometimes [it] expresses the utility
of some particular object, and sometimes the power of purchasing other goods
which the possession of that object conveys. The one may be called “value in
use” the other “value in exchange”

Anyway, about 11 months ago, I started experimenting with Google’s Cost-per-Click advertising model. I paid my $A10 set-up fee, and over the last 11 months, I’ve been running campaigns using various pricing-related keywords.

I have now received my first charge for the clicks I have received over the last 11 months, and I am pleased to say I have only provided Google with $A3.10 in revenue.

This obviously prompted me to consider whether my campaigns on Google is really worth the trouble and effort. And I recalled some interesting eye-tracking findings I read recently. You can read the stories here and here.

And as you can see from this image, the best place to be in the Google search results is not right-of-screen where their ad-sense listings appear, but in the organic search results.

Now….should I continue with my cost-per-click advertising? Hmmmmm.