---
id: ins_economic-value-estimation
operator: Steven Forth
operator_role: Co-founder & Managing Partner Ibbaka; top-10 pricing authority
source_url: https://www.ibbaka.com/
source_type: essay
source_title: "Three approaches to value-based pricing — Ibbaka"
source_date: 2026-03-03
captured_date: 2026-05-02
domain: [pmm, strategy]
lifecycle: [pricing-packaging]
maturity: applied
artifact_class: framework
score: { originality: 4, specificity: 5, evidence: 3, transferability: 4, source: 3 }
tier: B
related: [ins_price-before-product, ins_anchor-high-pricing]
raw_ref: raw/expert-content/experts/steven-forth.md
---

# A pricing model without a value model is adrift, start with Economic Value Estimation

## Claim
A pricing model without a value model is adrift. True value-based pricing begins with Economic Value Estimation (EVE) that *quantifies* the economic impact of your solution on the customer's P&L relative to their competitive alternative. Three approaches: Approximate (rough heuristic, fastest), Derived (data-driven from operational metrics), Direct (customer-validated through interviews and pilots). Approach choice depends on data availability, not preference.

## Mechanism
Most pricing decisions begin with what the seller wants to charge or what competitors charge, both anchor on the wrong reference point. EVE anchors on what the customer *gains* relative to their next-best alternative. Quantifying that gain produces a range, and the price lives inside the range as a fraction of value created. Without EVE, value-pricing claims collapse to opinion. With it, the seller can defend pricing in CFO vocabulary and the buyer can justify the purchase against budget.

## Conditions
Holds when:
- The customer's economic impact is measurable (revenue uplift, cost savings, time savings monetized).
- Sales has access to enough operational data to do the EVE work.

Fails when:
- Categories where the buyer's value is non-economic (creativity, aesthetics, feel).
- Pre-PMF startups where the impact data doesn't yet exist.

## Evidence
> "A pricing model without a value model is adrift; true value-based pricing begins with Economic Value Estimation that quantifies the economic impact of your solution on the customer's P&L relative to their competitive alternative."

· Steven Forth, Ibbaka (synthesized from operator's published work)

## Signals
- Sales decks include a customer-specific EVE calculation, not a generic ROI claim.
- Pricing decisions reference the EVE range, not seller-side cost or competitor benchmark.
- Pricing-metric selection (per-user, per-event, per-outcome) is debated against the value driver.

## Counter-evidence
For low-cost / high-volume products, EVE-level rigor on every deal is overhead, list pricing with discounting bands works better. Some buyers also explicitly reject ROI calculators as seller manipulation, regardless of underlying rigor.

## Cross-references
- ins_price-before-product, adjacent operator (Madhavan Ramanujam)
- ins_anchor-high-pricing, adjacent operator (Blair Enns)