What techniques do you use to see if your product or service provides Value?


2

I use a simple formula to define value . Benefits - Costs = Value But the key thing to note is that what you think are benefits for the customers might not be perceived as benefits. Asking them questions through surveys might be too intrusive. What processes / techniques do you think are useful to see if your product provides more value than your competitors?

Pricing

asked Oct 13 '09 at 21:36
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Anup
547 points

2 Answers


4

There is only one way to see if your product is delivering value and how much value it is delivering. Are people paying for it?

You can cheat the "benefit" part of your equation way too easily. "My product saves people 10 hours a week which at $50 an hour is $2k a month!". It's all guessing and usually bullshit. This is how companies say projects will save them 10M a year when it might not be saving them anything.

The real test is are customers paying for it, and what are they paying? Play with your pricing and see where the sweet spot is, that is how much value your product or service is delivering. When you look at two web applications and one is $20 a month and the other $40 and both are obviously successful, which one do you think is delivering more value?

answered Oct 13 '09 at 22:33
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James Avery
570 points
  • James, good point! playing with pricing is the hardest. – Anup 9 years ago
  • +1. Voting with wallets is the only thing that counts in business. "Benefits" and "value" are too hard to quantify anyway. – Jason 9 years ago
  • Jason, how can benefits be too hard to quantify ? In the software land , functionality which helps improve your workload or alleviate some pain is easy to note. What do you think ? – Anup 9 years ago

1

I would like to suggest an alternative formula to calculate Value

Value = (Benefits or utility or functionality)

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(Cost or Price)
You can make a Value quadrant to compare relative Value of products or processes, that's easy. - http://legalizeadulthood.wordpress.com/2009/09/04/agile-roundtable-notes-september-3rd-2009/
answered Oct 13 '09 at 22:21
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Arpit Tambi
1,050 points

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