Adding value to learning
The writing is on the wall. This dynamic digital era is too demanding a phenomenon which does not have much space for plain, vanilla deliverables. Many of the potent practices of the past in different spheres are likely to lose their utility and relevance as they may fail to respond to the new set of demands.
Unlearning, relearning and new learning are the routes or tools, which will equip the professional class to deal with the situations in a market place where fast-paced changes (and not just regular changes) are the new constant.
The trend mentioned above is an all-pervasive attribute of the dynamic era which includes our teaching methodologies in higher education as well. Considering the future challenges, a critical imperative is the consistent modification of curriculum to prepare the qualified set of managers for tomorrow.
The existing templates will need a massive makeover and we will need to include well defined learning processes for streams, which are niche in character.
Here is an example: Imagine a world where companies charge not based on production costs but on the real impact their products create for customers.
This isn’t a futuristic notion – it’s happening now. Welcome to the era of value-based pricing (VBP), a strategy transforming how businesses price their products by aligning costs with the value delivered to customers. Companies like Zoom, Shopify and HubSpot have adopted this model, turning pricing into a key driver of growth.
For business school students, especially those aspiring to be tomorrow’s founders and executives, mastering value-based pricing is not just an option – it’s a necessity.
Understanding this concept opens up exciting career opportunities in strategy, product management, pricing, and consulting. It’s a critical tool in the toolbox of any leader looking to build a business that can scale profitably and deliver lasting customer value.
At its core, value-based pricing sets prices based on the customer’s perceived value of a product, rather than on production costs or competitor prices. This model focuses on outcomes customers achieve from using a product, like improving efficiency, increasing revenue or enhancing user experience. By aligning pricing with customer value, companies strengthen relationships while boosting revenue.
Business schools must make provisions for imparting learnings in niche streams like value-based pricing (VBP), a critical skill often overlooked in traditional MBA programs. In industries like enterprise software and SaaS, where pricing can define success, understanding VBP is essential.
As businesses shift to recurring revenue models, flexible pricing strategies are key. Companies like HubSpot already tailor pricing to customer value. By offering more courses focused on VBP and real-world applications, business schools can better prepare students to lead companies that drive profitability, customer loyalty, and sustainable growth across sectors.
The understanding and deft use of concepts like VBP will put future business managers in an advantageous position. Furthermore, these new age pricing models also help in unlocking new revenue streams and strengthen client relationships.
In the US, many companies have dedicated pricing experts, directors, and teams focused on pricing strategy. For example, companies like Adobe, Tesla and LinkedIn have pricing departments that continuously refine models to maximise revenue and customer satisfaction.
In India, while some distinguished software companies, including the one where I spearheaded the adoption of a dedicated pricing function, and led the transition to VBP to align prices with customer value and achieved a successful financial transformation, many companies are still catching up.
Pricing responsibilities often fall under broader roles, such as sales, marketing, product management or even finance, which limits the potential for optimised strategies. While Indian companies are beginning to recognise the importance of having specialised pricing roles, they lag behind their U.S. counterparts.
For business students and aspiring entrepreneurs, mastering VBP offers a competitive edge. It opens opportunities in various roles, including product management, consulting, and entrepreneurship. For instance:
Product Management: Product managers who understand VBP can design pricing models that reflect customer needs, enhancing both revenue and satisfaction.
Consulting: There is an increasing demand for consultants specialising in pricing strategies, helping companies adopt VBP and unlock new revenue streams.
Entrepreneurship: Founders who embrace VBP from the start create customer-focused businesses that are scalable and sustainable to VBP.
For B-School graduates, understanding VBP is essential to leading successful, scalable companies in today’s competitive market. It would be quite a blessing if B-Schools take a note of these new trends, which have begun playing out in the market and take corresponding action.