June 4, 2025
Value Pricing vs Productized Services
A thread cropped up in Ditcherville where folks were wrestling with the distinctions between value pricing and productized services.
- Are the two compatible?
- Or are they mutually exclusive?
Several senior Ditchers jumped in to unpack these concepts, and did an excellent job of it.
At the end, I summarized the takeaways like so:
In my material, “value pricing” specifically means “setting a price based on the value of the desired outcome to a specific buyer”.
While it is true that a productized service is bought (or not) based on the perceived value in the mind of the buyer, since the offering wasn’t priced based on that value, I wouldn’t say that it was value-priced.
(Perhaps one could call it “value bought”, but that’s how literally everything is bought, so having a term for it would be redundant, IMHO.)
Productized Services are a way out of hourly billing, so in that regard, it has something in common with Value Pricing, but the two things are fundamentally different pricing approaches.
ASIDE:
Defining unclear terms is super important, so we know we’re on the same page in discussions with peers and with clients.
To help with that, I maintain a glossary of terms for new students.
If you haven’t seen it yet, you might want to check it out.
It’s a living document, so if you have any questions, PLMK and I’ll update the glossary if need be.
Yours,
—J