This week, while watching an online
video, I was reminded of some of the subtle differences between value-based in
consumer markets, compared to business markets.
In a previous post, I’ve described how products and
services in business markets can be priced on the basis of the revenue they
generate for clients, the costs they save them, and the risk they minimise.
Quantify one or more of these sources of value, and use it as the basis of your
pricing.
To a certain extend, the same principles
can be applied in consumer markets. Consumers can save money by shopping at
Aldi. Education can improve a person income-earning potential, and risk can be
minimised by driving a Volvo.
But consumer products can provide value
in other ways.
At the end of a three day value-based
pricing workshop in Manchester a couple of years ago, one of the delegates
approached me saying “I’d like to show you how we at Domino’s Pizza put value
at the centre of everything we do”.
The Operations Director opened her
laptop and logged on to a site where numbers were constantly changing. Every
Domino’s store in the UK (today there is over 800 of them) wer listed down the
left hand side. She went on to explain what all the numbers indicated.
One column showed the time a pizza order
was received. The next, the time the toppings were put on the base, then the
time the pizza went into the oven, and so on, until the pizza went out the door
on its way to the hungry customer.
“Do you know why we do this?” asked the
Ops Director. “The value we provide to our clients is giving them their pizza
in thirty minutes or less. And getting their pizza on time is the number one
reason [by a British country mile] why customers order from us next time they want
a pizza”.
That’s why Domino’s put time at the
centre of everything they do: it is the source of value they provide to their
customers.