#44: Perfect B2B Value-Based Pricing in 4 Steps

Chip Royce, Flywheel Advisors

In 2011, Netflix did something remarkable. Not in a good way.

In one quarter, nearly a million subscribers vanished.

Not because of content woes, not because the core product had changed, but because the company, cornered by flat growth, reached for the pricing lever to “fix” its numbers.

The story, picked apart on conference stages ever since, is easy to summarize: pricing is not the starting point. It’s what you do last, and it’s only defensible if it reflects what your buyers care about.

In boardrooms (and more than a few glass-walled startup offices), I’ve seen this scenario play out differently, with founders and investors circling spreadsheets like sharks.

Revenue’s soft? Tinker with price.

But price, when it works, is never a guess. It’s a receipt for value delivered and believed.

Not just by you, but by those wiring you real money.

Price Isn’t Strategy: It’s a Signal

There’s a gravitational pull to treat pricing as strategy. This is a trap. Research shows that companies prioritizing value-based pricing in B2B, anchoring price in what customers receive and perceive, see earnings that outperform their peers by up to 50%.

Salesforce, for instance, didn’t start by copying competitors or doing cost-plus calculus. They priced only after they had proof: customers with measurable wins, and a clear story to show it.

One founder shared (over black coffee, not Slack) how his team spent months tweaking pricing pages, hoping the right number would move the needle. Revenue bumped, churn spiked, and five months later they were right back where they started. Only grayer. As he put it, “Price didn’t fix what the customer couldn’t see.”

Chasing Revenue Is Like Pouring from an Empty Cup

You’ve probably heard (or said), “We just need 500 customers at $4,000 each. That’s $2 million ARR.”

Neat. But elegant math hides hard truths.

Quibi came armed with $2 billion and “the spreadsheet,” but launched at $7.99/month based not on value, but on runway math. Their audience voted with silence: the value wasn’t there for them.

It’s a familiar B2B trap: setting revenue goals before value is nailed down. Buyers don’t care about your modeled ambition. They care about outcomes, certainty, and the problems solved.

When the only thing holding your price up is what you hope happens in your board deck, spreadsheets become fiction.

What Comes Before Price

Solving price begins with clarity. Not clarity for you (the investor update and M&A slide deck kind) but clarity for your customer, spelled out in the results that matter to them.

1. What pain are you solving?

(And for whom, specifically?)

Does someone at your customer’s company stay awake thinking about this problem, or just you?

Zendesk didn’t sell “ticketing systems.” They marketed hours returned to support leaders’ lives.

2. How do your customers state the value you deliver… in their words?

I’ve seen founders convinced they’re selling “AI-driven advantage,” only to find their buyers say, “It just lets us skip manual onboarding.”

Adobe’s move to subscription? It only worked when customers could tie the price to the continuity of creative value, not new versions on a CD.

3. What’s your value metric?

Snowflake and Twilio scaled with usage-based models because the more their customers won, the more they paid, painlessly.

Slack let companies scale pricing only as actual, active users grew.

4. Who’s willing to pay, and for what?

One-size pricing dampens growth and inflates churn, especially across SMBs and enterprise buyers with very different stakes and perceived value.

HubSpot’s journey from scrappy SMB tool to enterprise player is a textbook in segmenting both willingness to pay and readiness to expand that spend.

Smart Pricing Engines Run on Value, Not Hope

Value-based pricing for B2B companies isn’t about picking the midpoint between your highest and lowest competitor. Pricing anchored in outcomes (time saved, risk shrunk, new revenue generated) translates into acquirable, justifiable deals and profit that means you don’t have to raise… as much or as often.

If you’re not modeling your pricing to account for customer acquisition cost (CAC), lifetime value (LTV), and sustainable margin, you’re not pricing for growth. You’re subsidizing a soon-to-fail experiment. Segway, priced on vision instead of verified value, became case study fodder instead of a cultural mainstay.

The best pricing setups grow with customers. Tiers, add-ons, legacy plans: you’re not punishing early supporters or throttling future ones. When AWS let customers expand modularly, it created not just an industry, but an annuity of loyalty. Don’t A/B test pricing until your value is ironclad and your story lands every time. A/B testing a fog won’t get you out of the woods.

Red flags? You’re copying competitor pricing, ignoring unit economics, or can’t draw a straight line from customer outcome to your price. Run a “pricing pre-mortem”: what if our beliefs about what customers value are wrong? Would our price still stand, or would we be Netflix in 2011, looking for a lever that’s not connected to anything?

Price Comes Last If You Want to Last

Pricing is leverage, but only if the fulcrum is value. Genuine, proven, and experienced by your customers.

As Warren Buffett (and most skeptical CFOs) remind us: price is what you pay, value is what you get. Make price the output of your best work, not the first line in your budget doc.

If your revenue is stalling, don’t ask: “What could we charge?” Ask: “What are we worth? To whom?”

When you get those answers right, the price almost sets itself.

Audit your price. Is it telling a story of customer success, or just of your spreadsheet’s ambition?

Chip Royce and Flywheel Advisors turn B2B pricing from guesswork into a competitive advantage.

We help ambitious companies define, communicate, and capture the true value they deliver.

Every pricing decision becomes a lever for growth, not a gamble.