The biggest limiter to better pricing: fully appreciating customer value

During the inaugural 1-Day Value-to-Price workshop, we helped an early-stage talent development platform quantify customer value supporting a massive 4.4x price increase over their initial, dart-against-the-wall, pricing.

The goal of the workshop was improved pricing confidence – provide a backstop for their current customer negotiations and future strategy.

We broke the 1-Day Value-to-Price workshop down into three phases:

Phase 1: Deep Dive on the Buyer and Buyer’s JobToBeDone

With a subject matter expert, we got a vivid sense of the buyer, their persistent frustrations, and their organizational incentives. While this conversation rarely yields a specific price point and willingness to pay, it does reveals valuable directional information: current strategic investments, alternatives, relative budget sizes, and directional enterprise value.

After better understanding the buyer’s context, we analyzed the pending deals identifying the customers’ true inflection point: these enterprises were embarking on a substantial, organization-wide transformation. This transformation itself was the impetus for the deal – the buyers wanted help ensuring success. Reminder, your target customer is probably a verb, not a noun.

Phase 2: Align Product-to-Job

After lunch we pulled in the Head of Product to discuss the current product and product strategy against the articulated customer incentives:

• Can the current product fulfill the customer need?
• If not, is the gap addressable by the near-term roadmap or does it require a substantial reworking of the backlog?

Thankfully, the gaps were relatively small and could be readily accommodated when the deal was signed, and the engagement officially kicked off.

Phase 3: Quantification of Customer Value

After the product review, we started building the Value Stack for the C-level target buyer inside a 1,000+ employee organization.

The insights from the morning session, provided four discreet ‘jobs’; across strategic, organizational, and personal lenses. As we started with substantially more than four, a substantial part of the sessions was determining which ‘jobs’ were distinct and substantial, and which were simply nested inside. Starting at the top, we quantified the financial impact of solving each one with its own specific equation relative to the customer’s context.

As we hit enter on the spreadsheet equation for the most substantial portion of this value, my client went quiet. Staring at the result, he smiled: 

“While this entire day has been helpful. This. This is great. This is exactly why we’re here.”

The resulting calculation showed a fee level 4.4x what my client was originally considering.

The Takeaway

The single biggest reason founders undercharge is not lack of confidence, but failure to fully quantify customer value – within the customer’s context (not the founders’). 

This is not a one-time activity, it’s a continuous part of marketing and product strategy. Ideally, this quantification happens ahead of product development to validate the initial investment, and then at least annually as the customers and markets evolve. As this inaugural workshop demonstrated – just a few focused hours can make a substantially more exciting offer.

Given this outcome was in service of securing a large, strategic deal, I’m also imagining this workshop functioning as a mini-Deal Desk, establishing a foundation in tangible, quantified customer value for a truly win-win engagement.