What's value? Really?
Value is one of the most misunderstood notions in business. For decades, the exercise of creating a value-proposition has been treated as a creative process and that particular exercise misguided us in communicating the real value of our new products, services, and solutions.
It's no surprise that in microeconomic terms, value is a quantifiable notion and it equals customers’ willingness to pay minus their opportunity cost. The core of value creation lies in creating the differentiated products and services that maximize customers’ willingness to pay and generate a greater surplus of perceived benefits over their opportunity costs. And again, in microeconomic terms, value isn’t being created unless somebody is paying for it.
Think of all those features and product attributes you throw around in your product discussions, think of all the amazing ways your product impacts your customers. And notice that those features that customers are willing to pay for matter more than anything, and you have to get THOSE right, in order to make it.
This is a particularly hard one to swallow for product owners, designers, and engineers since they are so close to their product and have a much more complete vision of it than their customers ever will. Sometimes, it is af if someone is telling your that your baby is ugly :) It’s hard to "kill" parts of your product/solution vision, it just is. However, to make it in the market, what people are willing to pay for and how much matter more than anything else - particularly more than our own opinions as product owners..
What real benefits does your solution provide to the way in which your buyers work, play, or live their lives and by how much?
Buyers' willingness to pay increase as their value gap shrinks. You can drive adoption and market share by focusing on just the features, attributes, and offers that enhance your customers' perceived value. In order for you to unlock this kind of pricing power, you must identify and quantify the value gap, by conducting willingness-to-pay research.