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Pricing Strategy: Labor Theory of Value versus Value-based Pricing

Companies within in the printing industry have historically had a manufacturing mentality—they subscribe to the labor theory of value, which states that the value of a service is determined by the amount of labor that goes into production. Now, thousands of firms in a variety of industries are pricing their services according to the external value created—as perceived and determined by the client—rather than the internal costs incurred in generating services. This article explores the concept of value-based pricing and highlights some real-world examples of companies that are embracing this strategy.

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About Barb Pellow

A digital printing and publishing pioneer, marketing expert and Group Director at InfoTrends, Barbara Pellow helps companies develop multi-media strategies that ride the information wave. Barb brings the knowledge and skills to help companies expand and grow business opportunity.

Please offer your feedback to Barb. She can be reached at barb_pellow@infotrends.com.

Discussion

By David Dodd on Aug 03, 2017

Great article on a very important topic! For those who may want to take a deeper dive into this topic, I would strongly recommend "The Strategy and Tactics of Pricing" by Thomas T. Nagel, John Hogan, and Joseph Zale. The book is in its 5th edition, and I believe that a 6th edition is now in the works. Unfortunately, it appears that the book is now used as a textbook in university business courses, which means the price of the book has skyrocketed.

I read the 3rd edition of the book about 15 years ago, and I used the principles in the book in my consulting work with printing companies, particularly those who were making a major push into offering marketing solutions. You may be able to find an earlier version of the book at a reasonable price.

 

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