1. Value Function Price-Cost Leverage Market Value Pricing
Ken Homa

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

3. Market Value Pricing
High $
Value
Low
Few
Many
BENEFITS

4. Market Value Pricing
High $
Value
Low
Few
Many
BENEFITS

5. Market Value Pricing
High $
Value
Cost
Low
Few
Many
BENEFITS

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

7. 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

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

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

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

11. Value Function Pricing Implications