This very nicely explains the reasons for value-based pricing, and I agree with them. Where I struggle with the concept is in the actual implementation.
In Does value-based pricing live up to the hype I wrestled with many of these issues. The hard part is getting full buy-in and transparency from your client in order to uncover the details required to properly assess a true value-based price.
This is made even more difficult because you need that buy-in right at the beginning of the relationship before you've had much time to build trust.
How do you go about this? How do you get clients opened up to the concept (and get them to open up their books enough to supply a realistic project value)?
People are so used to time/cost-based pricing that I find it hard to get them to make that mental shift. Even more so if you’re in competition with other vendors and they’ll be comparing your value-based price to a more traditional time-based price.