Value Before Pricing

Jason Cohen shares insights about value generation and pricing strategy, emphasizing that businesses should prioritize creating maximum customer value before deciding how to monetize or split that value.

Key Points:

• Value vs Time Selling:

  • Customers don't truly value their time savings
  • People will do "crazy things to save $2"
  • Don't focus on selling time savings, focus on selling value

• Value Proposition Example:

  • Same product can be positioned two ways:
    • "Half your costs" - customers might pay 25% of savings
    • "Double your leads" - customers might pay 100% more
  • Value-based positioning can yield "an order of magnitude more valuable" pricing

• Value Generation Philosophy:

  • First generate as much value as possible for customers
  • Then decide how to split that value with them
  • Splitting value can happen through:
    • Higher pricing
    • Better retention
    • Customer advocacy
    • New customer acquisition

• Strategic Considerations:

  • Value metrics beyond price are harder to measure
  • Non-price value elements are "very real" for business health
  • Focus on building "healthier business and the risk and the growth"
  • Position offerings in terms of value generation rather than cost or time savings

This perspective comes from Michael Mauboussin's philosophy about value generation and distribution in business relationships.