The value pricing of information technology services

By definition, “technology” as “embodied knowledge” can bear a price ranging from zero (essentially a “free good” in infinite supply) to a very high monopolistic limit (the offering has unique characteristics/markets providing it noncompetitive advantages). Theoretically therefore, value price can fall anywhere between zero and infinity. The challenge therefore is to find an optimum price point where the net economic benefit to a specific customer intersects a specific provider´s cost/margin requirements. However, unlike market pricing, value pricing requires the understanding of: (1) the unique requirements of each customer, both in terms of solution and payment; and (2) the provider´s ability to develop unique, customer-specific offering/s, both in terms of solution and payment. These two factors essentially determine the bargaining power between the customer and provider in order to attain a value-price point