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15Pricing the Relationship

A man had better overvalue than undervalue himself. Mankind in general will take his own word for his own merit… . [K]now your own value, whatever it may be, and act upon that principle; but take great care to let nobody discover that you do know your own value. Whatever real merit you have, other people will discover, and people always magnify their own discoveries, as they lessen those of others.

—Lord Chesterfield

Nelson Mandela said, “There is nothing like returning to a place that remains unchanged to find the ways in which you yourself have altered.” Ever since we began discussing the subscription economy the number one question we received was, “How does this differ from value pricing's rule that you price the customer, not the product or service?” As we further researched this area we began playfully referring to Value Pricing 1.0—as taught in our book, The Firm of the Future, and my later work, Implementing Value Pricing—and Value Pricing 2.0, the subscription model.

There are many foundational theories and principles that are still the same, as we explored in Chapter 14. The subjective theory of value is still true, as well the fact that price justifies costs incurred, not that costs determine price. Pivoting to a subscription business model entails the same changes as any other business model change: Different pricing, and a different dashboard, that is, the key performance indicators that we monitor (the latter will be discussed in ...