Setting the right price for a solution is really crucial: too high, and customers will meet their own needs; too low, and suppliers won’t get paid for the value they are delivering and the effort that went into it. How can suppliers figure out the right premium and the pricing model that will suit their customers?

A supplier needs to know precisely what a solution is and to be candid about whether or not it is offering one (see "Making solutions the answer"). A solution isn’t simply the bundling together of related components. Nor is it the mere integration of products and services provided by a customer, even if the supplier itself also provides some of the components: a software integrator that provides a sound card in the process of installing software doesn’t instantly become a solutions provider. A true solution is defined by and designed around a customer’s need, not around an attempt to find a new use for a supplier’s current products. And only as the relationship between supplier and customer becomes more collaborative in defining the customer’s need—designing the product and service components and integrating the whole into a distinctive offering that is...