Del valor al pago
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In entrepreneurship, the Experiments they give you different signals. And the ones we're looking for now are those that tell us that our idea generates sufficient value enough for someone to want pay for it.
We already know how to recognize these signals of interest: our potential customers leave their email, ask questions, sign up for a waitlist, use a prototype repeatedly, make a reservation… Or, if we find the strongest evidence, pagan.
Getting there requires a challenge that begins when we manage to attract audience. That is just the beginning. The goal is to find out if there is a tension significant enough enough to justify a financial commitment. If the value that we propose with our product or service leads to payment. If this sequence is met:
Problem → Perceived value → Willingness to pay → Initial price
1. The value generated by the problem
Although we've already talked about this a lot, there's a particularly interesting part about the problem that you must keep in mind to determine what value your solution brings and why it would lead to payment: people don't buy things; they "hire" them to make progress toward something they want to achieve.
That's why, before talking about payment or prices, you must identify the real value our idea provides to potential customers. You can ask yourself these questions:
How does it solve their frustrations?
Does it make them gain time, money, or energy?
How does it help them to achieve progress are they trying to achieve?
The answers to these questions hold the key the value of your solution, which will be higher the more frequent, urgent, or annoying the problem it solves. In these cases, we're talking about a monetizable pain, una fricción tan incómoda que las personas ya invierten recursos en hacerla desaparecer.
When the cost of living with the problem starts to be perceived as greater than the cost of the solution, it usually appears a reasonable basis for willingness to pay.
2. Progress is value
To get to know better the value you generate you must understand that it's not (only) in the features of your product. It's, mainly, in the result that allows achieving.
For example, a person doesn't buy an organization app because they like agendas. They buy it because they want to reduce the chaos in their work, feel more at ease, and achieve their goals better.
Thus, value has different dimensions:
Functional: what task it helps perform.
Emotional: how it makes the user feel.
Social: how you want to be perceived by others.
When a solution removes obstacles and facilitates the progress the user seeks, the value becomes tangible. And it leads you to the next step.
3. From value to willingness to pay
Willingness to pay represents the maximum price a person would be willing to pay to solve a problem or achieve a result. It doesn't depend solely on the product. It also depends on the context.
There is often a specific moment when the problem becomes urgent and the value increases drastically. That's why products sold at gas stations are more expensive: you're hungry or thirsty and need to solve it immediately. The gas station offers it to you, and your willingness to pay increases: you accept a higher-than-usual price because it solves an urgent need. Here one of the most important questions of your validation appears:
Is the value of my product/service important enough for someone to pay for it NOW, in this context? That's why, when validating an idea, it's not enough to ask "do you like it?". You need to understand when the user desperately needs a solution.
4. Presenting the value is also part of the experiment
Two people can perceive the same value differently depending on how it's explained. That's why, when exploring a price hypothesis, you're not just testing a number. You're also testing the way you communicate the value.
Often, the question isn’t:
‘Is it too expensive?’
Rather:
”Have I made the person understand what they get in return?”
That's why it's often useful to present the problem first, then the value generated, and only then the price.
The price is easier to interpret when it appears within a coherent story.
5. Payment happens when value outweighs resistance
Even when value exists, people don't automatically buy.
The decision to pay depends on the balance between four forces:
Drive for change
The frustration with the current situation (push).
The appeal of the new solution (pull).
Resistance to change
The anxiety that the solution won't work.
The habits associated with continuing to do the same.
The willingness to buy appears when the forces of change outweigh clearly to the forces of resistance.
That's why, during validation, the most relevant signals are not praise or opinions, but the commitments: a pre-purchase, a reservation, a paid pilot test or any behavior that involves assuming a cost to access the solution.
6. Bonus tip: the price is a translation of value
Only after understanding the problem, the value generated, and the willingness to pay does it make sense to talk about price.
The amount assigned to your product or service is never the starting point. It is the consequence. In fact, one of the most useful ideas in a pricing strategy is to think that the figure must reflect the value perceived by the customer.
If a solution generates a benefit far greater than its cost, there's room for to charge for it. If the perceived value is low, no price adjustment will solve the problem.
That's why, in the early stages of entrepreneurship, the goal is not to find the perfect price. The goal is discovering whether the user perceives enough value to make a financial commitment.
That is (we can never stress this enough) the real validation. It doesn't happen when someone says your idea is good. It happens when the problem is so important; the value so evident, and the progress obtained so desirable that a person decides to pay to get it.
Sources
https://en.wikipedia.org/wiki/Willingness_to_pay
https://www.christenseninstitute.org/theory/jobs-to-be-done/
