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Case study
From Cost Plus to Value Based Pricing
How a software and data service provider doubled their ACV
About the project
A UK-based software and data service provider had built a strong product delivering analysed financial data to advisors and brokers. Despite clear customer value, their cost-plus pricing model led to constant negotiation and underpricing. Here is how they changed their approach.
The challenge
- Flat-rate pricing did not reflect the value delivered to different customer segments.
- Lack of internal value calculations made it hard to justify prices during negotiation.
- Usage patterns varied significantly, but pricing was one size fits all.
The solution
Three strategic moves.
Action
Impact
Ran internal workshops to establish value hypotheses
Aligned pricing with cost savings and revenue impact for customers.
Analysed customer usage patterns
Identified how different segments consumed the product.
Introduced a three-tier pricing model
Based on number of data sources and usage volume, with additional bundles.
Validation
The strategy was built on real-world data:
- Qualitative interviews with existing and potential customers validated the value hypotheses.
- Usage analytics ensured the tiers matched actual customer behaviour.
The results
Metric
Result
Average contract value
More than doubled
Pricing structure
Three-tier model based on data sources and usage volume
Customer negotiations
Significantly reduced
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