Author: Stephan M. Liozu, Ph.D.

In order to design and deploy value-based strategies, including value-based pricing, firms must be equally obsessed with obtaining deep customer insights and deep competitive information, as the author explains. Stephan M. Liozu, Ph.D. (, is the Founder of Value Innoruption Advisors, a consulting boutique specialized in value-based pricing, industrial pricing, digital and subscription-based pricing. He is also an Adjunct Professor & Research Fellow at the Case Western Research University Weatherhead School of Management. He is a Certified Pricing Professional (CPP), a Prosci® certified Change Manager, a certified Price-to- Win instructor, and a Strategyzer Business Model Innovation Coach. He has authored seven books: The Industrial Subscription Economy (2022), Pricing: The New CEO Imperative (2021), B2G Pricing (2020), Monetizing Data (2018), Value Mindset (2017), Dollarizing Differentiation Value (2016), The Pricing Journey (2015), and Pricing and Human Capital (2015). Stephan sits on the Advisory Board of the Professional Pricing Society. He is a Strategic Advisor at DecisionLink and Monetize360 and a Senior Advisor at BCG.

The Journal of Professional Pricing, December 2019

Three primary pricing orientations are used to set prices: customer, cost, and competition (the 3Cs). Most scholars, consultants, and practitioners agree that pricing based on customer value is the orientation most preferred for fully capturing the value from markets. The reality is that you need to inform your pricing decisions with information from the 3Cs. These orientations are not mutually exclusive, and all require equal amounts of analytics and high-quality data. The connection between customer value and competition is probably the most critical. Because customer value is relative and competitive advantage is reference-based, I often state that value-based pricing can’t be done without a deep understanding of your competition.

Competitive Intelligence for Value-Based Pricing and EVE®

I’m not recommending an obsession with competition. I’m advocating a deep focus on understanding the competition—their offering, behaviors, and pricing approach—to support the analysis of competitive advantage and the quantification of customer value. I posit that in order to design and deploy value-based strategies, including value-based pricing, firms must be equally obsessed with obtaining deep customer insights and deep competitive information. These two dimensions are the anchors of the value-based-pricing analysis and are part of the initial steps of value-based pricing focusing on customer segmentation and competitive analysis. A firm’s ability to deploy a value-based-pricing program depends on the level of maturity on these two dimensions, as depicted in the matrix below.

If maturity is low on both dimensions, the priority is to build a strong knowledge foundation on how to do value-based pricing, how to conduct competitive analysis, and how to collect customer and competitive intelligence (CI). At this stage, it’s essential to integrate the process of collecting, connecting, and mining customer and competitive information into all go-to-market processes in the firm. Everyone in the go-to-market community needs to be responsible for this process. It’s unrealistic to think that the CI and customer research teams are solely responsible for this. Even though they manage the process and have expertise in the science, they need data from the business side to feed the process engine. It’s a true team sport. Only when this is done systematically and deeply can a firm move along the maturity spectrum and eventually be able to think about an enterprise-wide value-based-pricing deployment.

Value-based pricing requires CI. Let’s now explore the value-based pricing process in detail and see what’s needed, and at what step.

Competitive Intelligence in the Value-Based Pricing Methodology

Value-based pricing is a six-step methodology. At each of the steps, there are competitive analyses or competition-based activities to perform.

Competitive Intelligence for Value-Based Pricing and EVE®
  1. Step 1: Step 1 is about mapping your competitive landscape and understanding all competitors using some critical descriptive variables. A competitive landscape is usually the first visual to begin with. Positioning and value maps are also useful for clustering your competitors in terms of value and price. You might also consider preparing a competitive matrix, another tool for rating and ranking competitors. Examples of these tools are readily available via a Google search.
  2. Step 2: Step 2 focuses on customer segmentation and how competitors play in each segment. For this step, I typically recommend preparing a segment/competitor matrix, which is a list of competitors (direct, indirect, secondary, future) by customer segment. This helps identify differences in competitive intensity and competitors’ ranking by segment. It’s also pre-work to list possible next best competitive alternatives (NBCAs) by segment.
  3. Steps 3 and 4: Step 3 focuses on extracting true differentiation, and step 4 is all about quantifying the impact of differentiation in terms of your customer’s financial benefits. This is the heavy-duty part of CI. To extract true differentiation and quantify customer differentiation value, you must perform deep and advanced CI activities. We explore some of these below, but they include selecting the right NBCA, conducting competitive benchmarks and assessments, and finding competitive pricing levels. These are must-do steps to perform EVE® (economic value estimation framework, as depicted below) and get to the heart of value-based pricing. If detailed, granular information about your competition is unavailable, the customer value analysis won’t lead to anything you can use in the price-setting or the value-based-selling processes.
  4. Steps 5 and 6: Steps 5 and 6 focus on sharing the value pool and eventual pricing setting within the value pool. Here, too, some CI is needed. I focus on the positive and negative pricing moderators that might influence the value pool sharing as well as the understanding of your competitors’ pricing behaviors.

Selecting the Right Next Best Competitive Alternatives

Depending on your competitive analysis, and for any relevant offer within a particular segment, you might have three, five, or ten competitors to consider for the reference value. This is why I recommend that you rate and rank your potential reference values using a selected list of criteria. The goal is to derive the top three NBCAs so that you can begin your EVE® analysis. Selecting the right reference is often challenging. The following short process offers an opportunity for rational preparations.

  1. Prepare a competitive landscape mapping direct global, direct local, indirect, partial, and future competitors.
  2. Prepare a competitor/segment matrix.
  3. Rate and rank the competitors: by intensity, customer mindshare, share of wallet, strategic suppliers, etc.
  4. Run multiple EVE® models (NBCAs 1, 2, and 3).

This process won’t deliver you THE perfect answer, but it will remove the anxiety of having to pick from a long list of competitors. I often get the question about “partial” competitors, that is, those that compete directly but not on the entire scope of the offer under consideration. My answer is simple. Include them in the process, and if they make it to the top list, make sure you include the right differentiation comparing a partial versus fully integrated offer. One-stop shop brings value.

Selecting the Right Reference Value (NBCA)

Another challenge is finding the competitor’s pricing level. It’s easier in business-to-customer (B2C) but more complicated in business-to-business (B2B) to reach a final net price for a specific product, service, or offer. There are four possible situations with respect to the reference value:

  1. You have the competitors’ pricing levels: You can therefore run a traditional EVE® model.
  2. You have a range of competitive price levels: You can use the range as a reference value knowing that, traditionally, this competitor prices within this range. This works well for large offers, complex offers, and bundled solutions.
  3. You have a market price for a similar offer: In case you cannot find the detailed pricing reference value, you might switch the scope of your value model and focus on an industry or market average price. This isn’t ideal, but it’s better than nothing. The key is to get going while collecting more competitive information.
  4. You have no information: This is obviously what happens when there’s no process for gathering credible competitive pricing information. In this case, I recommend doing the value model against what is called doing nothing. This assumes that there are no competitors in play and that the customer hasn’t begun the process of gathering competitive alternatives. This is highly unlikely, but, again, the key is to get started.

Depending on where you stand on the customer/competitor maturity matrix above, you might get stuck because of the lack of competitive information. I recommend that you get unstuck quickly and get your teams to learn the EVE® process, even if the information is imperfect. Pick an initial model that you can run for which information is more readily available. The key is to get started. If you wait for perfect customer and competitive information, you might never begin.

Competitive Moderators in Value Pool Sharing

An additional key consideration in the EVE® framework is to identify the relevant competitive moderators to define the best way to share the value pool and to avoid the traditional 50/50 split. Some of the moderators are “positive,” which means they might allow you to capture more of the value pool, whereas others are negative. I list a few below, but this list isn’t exhaustive.

  • Response Behavior: What’s the typical response of specific competitors? Will they respond aggressively and consider that you have attacked them frontally?
  • Industry Structure: What does the Porter model tell us about the nature and strengths of the competitive landscape?
  • Number of Competitors: Are there five or fifty competitors sharing the industry pie?
  • Competitive Intensity: Are all competitors acting aggressively, or is there relative order in the industry?
  • Competitive Entrenchment: How deeply is the NBCA entrenched in the customer or segment that we are conducting the EVE® model for? Will it be easy to dislodge and replace the NBCA?
  • Customer Relationships with Competitors: What are the relationship maps between a customer’s accounts and specific competitors? Are some relationships stronger than others?
  • Propensity to Enter Pricing Wars: Will competitors feel attacked and declare a price war in our core business? Should we price cautiously in the value pool to avoid a frontal attack?
  • Competitor’s Sensitivity to Market Share: How obsessed are competitors with market share in their communication? Should we first focus on small accounts under the radar at a higher price?

Remember that pricing moderators aren’t negative differentiators. These are two different things. If you have a negative differentiator, you’ll have to quantity the cost to the customer and deduct this from the total positive differentiation value. Moderators don’t address differentiation. This is done early in the value-based-pricing process. The moderators allow you to set the price in the value pool.

Methodologies for Conducting Competitive Intelligence

There are six techniques or methodologies that I recommend when conducting CI, as shown in the table below. Of course there are more, but six is a good start. These require training, capabilities, and sometimes the appropriate tools. Let’s review them at a high level.

Competitive Intelligence for Value-Based Pricing and EVE®
  1. Competitive Reviews, Black Hat Review, War Games: These techniques allow teams to put themselves inside the skin of competitors and role play for a day or two. These sessions can be conducted for large strategic bids or for long-term-contract preparation. The key is to find people who know enough about the specific competitors and understand their culture. These techniques are well structured and managed by a professional coach and/or facilitator. The real value comes at the end of the session, when the debrief is conducted in front of leadership and the capture leader.
  2. Competitive Profile Matrix & Value Maps: These tools are used in the early stage of the value-based-pricing process when marketers study their competitive landscape in preparation for the next steps. Both require some type of ratings of us-versus-competition so that a relative value score can be computed. The value is to give clear competitive positioning and to have a high-level view of the most dangerous competitors.
  3. Detailed Technical & Product Benchmarks: These provide deep and thorough analysis of competitive offers, technology, and products. They require a granular review of competitive functionalities, attributes, and technology components. Traditionally, product-line managers and technical managers might work jointly to conduct these. The value of these assessments is in their identification of product or service differentiators that can be use in the EVE® framework among other differentiators. Often, consulting companies are used to conduct reverse-engineering of competitive offers.
  4. Price-to-Win Analysis: This methodology is most likely used in the business-to-government (B2G) sector, because part of the overall capture process is both a process and a result. Price-to-wincan be best defined as the cost-capability trade-off that embodies a firm’s strategy. Price-to-win, the process, identifies the position that a firm needs to achieve to meet its business goals and objectives. The price-to-win analysis output is a window-to-win map plotting the customer’s budget considerations, the competitors’ capabilities, and price levels.
  5. Competitors’ Pricing Behavior Analysis: This simple PowerPoint template lists ten pricing dimensions profiling the pricing approach of each competitor. These include pricing behaviors in the market, propensity to enter into price wars, declared pricing strategy, and others. Profiles can be added to the outcome of the overall competitive analysis.
  6. General Competency Inventory: The most complex competitive analysis is to conduct a competence and/or capability assessment for each competitor or specific area of interest. This is needed when studying technical capabilities, service competencies, or corporate strengths. This type of analysis includes asset inventory, factory functional and technological capabilities, laboratory capabilities, service personnel credentials and accreditation, and corporate financial relationships.

These are some of the most commonly used techniques. They require working in teams with marketers, market research teams, consultants, and your internal CI team. They require budgets and resources as well as a detailed CI roadmap.

Competitive Intelligence for Value-Based Pricing and EVE®

Ninety-Day Process to Collect and Connect Competitive Pricing Information

You will need to find competitive pricing information (CPI). In B2B and B2G, reaching a net price that is precise and credible is a challenge. The collection of CPI needs to be ongoing as part of the business mindset. Most firms lack a formal process for CPI collection, connection, and mining. Instead, this work is done informally under the impetus and drive of business individuals in the marketing, sales ops, or pricing team. If your firm has not yet begun to gather CPI, I propose the approach below. This can be initiated and fully operating in ninety days.

  1. Assemble and launch a CPI task force: This task force can meet once a month to share CPI and ensure that it’s exploited in the day-to-day business via the sales ops plan and the pricing council. The task force must include sales, marketing, business development, CI, and pricing. Other functions can join as well when needed.
  2. Assign responsibility and accountability: Someone needs to lead this effort. I recommend someone on the pricing team joined at the hip with the CI expert.
  3. Conduct an internal evaluation of what CPI is already readily available: People gather CPI but don’t share it. Others have knowledge in their heads and keep it there. Industry and marketing reports might contain relevant CPI information. By conducting an internal inventory of what’s available, you’ll see the gaps and set priorities for what’s needed.
  4. Conduct gap analysis, CPI data needs, and tracker: This is ground zero. It’s the start of the process, and the role of the task force is to fill in the gaps and begin connecting and mining information.
  5. Launch formal mechanism to systematically collect CPI: The task force needs to reach out to their communities and begin gathering all CPI entering the organization through multiple entry points. This includes ensuring that you’re aware of what’s being gathered. The big challenge is to know when information is available. People need to know that the process exists and that CPI is being collected.
  6. Track progress of CPI collection in task force and pricing council: You’ll be surprised to learn what can be collected with attention and intention in the first forty-five days. We often think that we have no CPI until we begin paying attention to what’s being collected. The process then needs to move into proactive mode. Data are being caught coming into the organization. But the task force can also request specific information that is missing and critical to the organization. It can also task consultants with conducting CPI research.
  7. Integrate relevant and credible CPI into the pricing decision process: No data will be useful until it’s being used in the price-setting process. This includes the value-based-pricing process, the price-to-win process, and the EVE® framework. These are essential best practices to keep in mind when using and sharing CPI. The data need to be accurate and credible enough to generate enough confidence in the pricing decision-making process.
  8. Design tools and technology to automate the CPI process: After ninety days it might be time to think about the future and consider automating the process. Of course, there is software that can help you manage CPI. Beginning with a simple CPI database that’s connected to your pricing software might be a good middle step. The priority is the quality and up-to-date-ness of your CPI.

Collecting CPI is both a science and an art. The key is credibility and confidence in the data. For that, the CPI must be triangulated. Having just one data point for estimating competitive pricing level won’t cut it. You need multiple data points to come up with a pricing range or a credible competitive price point. There’s no way around it. You also need to document the sources of information and gauge their credibility.

Competitive Intelligence for Value-Based Pricing and EVE®

Concluding Thoughts

This paper highlights the need to develop strong capabilities in CI to support pricing excellence and the deployment of value-based pricing. The responsibility is shared among go-to-market functions. Your firm might have a CI or business intelligence function. That’s very helpful. CI is a profession. There are professional organizations in the field, and I highly recommend that you visit the website of the Society of Competitive Intelligence Professionals (, the Academy of Competitive Intelligence (, or the Institute of Competitive Intelligence ( ACI offers a certification called CIP™ which I highly recommend for any pricing professionals wishing to go deeper into the value-based-pricing domain. A certification in CI can be a good complement to your Certified Pricing Professional (CPP) certification from PPS.

Certification and training are important. CI is one of the strategic skills that any pricing professional needs to have. You cannot truly do competitive-based pricing and value-based pricing without deep knowledge of the competition. The CI methods and concepts need to enter your pricing process in the same way that pricing analytics and pricing tactics do. CI is part of the job description, roles, and responsibilities. These are also shared with marketing managers, product managers, and key account managers with excellent process guidance from your CI team. The functional experts and the consumers of competitive information share the responsibility.

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