Imagine if your company could measure, customize, and charge for—in real time—the value your products or services create for each customer. Seized to its fullest extent, such an opportunity would enable you to provide more value to more customers and still earn more money.
Progressive pricing is turning that idea into reality, one that more sensibly aligns with today’s digital products and services than traditional pricing strategies from the industrial-era pricing models could ever do. This innovative approach—already embedded in the sharing economy and in other sectors such as financial services—scales prices up or down on the basis of the value an individual customer derives. While progressive pricing might sound too good to be true—even a violation of the rules of traditional economics—technological advancements and the rules of digital economics are already making it possible. Indeed, the relationship between firms and customers is shifting so quickly and fundamentally that this value-based pricing strategy approach will soon be a competitive pricing strategy necessity, not merely an intriguing alternative, as companies make the measurement of discrete customer value a core competence.