Price the value you create, not the cost you carry

Price the value you create, not the cost you carry

Most founders set their price by stacking up costs and adding a margin on top. It feels safe and defensible, and it leaves most of your money on the table. Cost tells you the floor below which you lose money. It says nothing about the ceiling, and the ceiling is set entirely by the value the customer gets.

The shift that changes everything is to anchor on the outcome. If your product helps a sales team close two extra deals a month, and each deal is worth twenty thousand, the value created is enormous, and a price of a few hundred per seat is almost an insult to that value. The customer is not buying your features or your hours. They are buying the gap between where they are now and where you take them.

This is why two products with near-identical cost structures can sell for ten times apart. The expensive one has done the work to understand and articulate the value it creates, and it prices against that number. The cheap one is still quietly anchored to what it cost to build.

Value-based pricing does not mean charging whatever you like. It means doing the homework to know what the outcome is worth to a specific buyer, then capturing a fair share of it. Capture too little and you signal that the outcome is small. Capture all of it and there is no reason for them to buy. A healthy rule of thumb is to leave the customer with several times the value they pay you, so the decision is obvious.

INTERVIEW EWOUD: Give a specific example from your own work or a client where you moved a price away from cost-plus and onto the value created. What was the old price, the new price, and the outcome number you anchored to?