Price the product right knowing it will get the job done better
Sure, there is a price tag on every product and service. But, when we look at pricing strategy through a jobs-to-be-done lens, we see that customers aren’t paying for products. They are paying to get a job done. If we know what customers are willing to pay to get a job done well and how well a product helps get the job done, we have the two key inputs we need to formulate an effective pricing strategy framework. With a jobs-to-be-done perspective, we have created and patented a whole new way to determine the value of a product and how to price it.
Companies think that customers are paying for products, but they are not. This is the myth that misleads. They are paying to get a job done. Consequently, companies should stop asking their customers what they would pay for a product. It is the wrong question to ask, and a question customers can’t answer.
When companies ask customers what their willingness to pay is for a product, companies are asking them to figure out how a new product, technology, or feature set is going to help them get a job done better and by how much, and then to translate that improvement into a fair price. This is simply too much to ask.
When trying to figure out how to price a product, the most important question to ask is, “what are customers willing to pay to get the job done perfectly?” For example, a patron may be paying $50 every time she visits the hair salon, but she might be willing to pay $100 if she could find a salon that would deliver perfect results.
This raises the next question: what does “perfect” mean and how do we know if a product helps customers get the job done perfectly? To answer this question, we need to know the degree to which a product satisfies all the customer needs associated with getting the job done. Unfortunately, in nearly all companies, managers can’t agree on what a customer need even is, so of course they don’t know all of them. So how can they determine the degree to which a product satisfies all the customer needs? They can’t. And this is the problem that we solve.
Our pricing methodology works because it is built around a solid definition of what a customer need is. We have discovered that customers consider between 50 and 150 metrics (their desired outcomes) when assessing how well a product or service enables them to successfully execute any job. These metrics are the customer’s needs. They power our innovation process, Outcome-Driven Innovation (ODI).
By assessing how highly a product rates in these metrics, we are able to determine the degree to which a product satisfies all the customer needs. With this insight, we can price a product right. Learn more about how we can help you price your products right with our growth strategy consulting services.
In this timeless 2002 Harvard Business Review article, Tony Ulwick first introduces the concept of Outcome-Driven Innovation to HBR readers. He explains how Cordis Corporation (now a division of Johnson & Johnson) used ODI to increase its angioplasty balloon market share from 1 to 20 percent by knowing who its customer was and helping that customer get the job done better.
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In this groundbreaking 2008 Harvard Business Review article, Tony Ulwick and Lance Bettencourt reveal an important discovery they made while turning jobs-to-be-done innovation theory into practice: job mapping. Recognizing just who is your customer, a job map breaks down the job the customer is trying to get done in a way that enables us to discover all the customer’s needs.
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Outcome-Driven Innovation is the most effective innovation process in existence today. This white paper, by Strategyn founder and ODI inventor Tony Ulwick, explains why innovation has historically been an ineffective process, the discoveries he made that led to ODI, and how we use it to identify just who is your customer and accelerate company growth.
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What Customers Want, the best seller by innovation thought leader Tony Ulwick, explains what Outcome-Driven Innovation (ODI) is and why it works. Ulwick, who pioneered jobs-to-be-done thinking and invented ODI, details how ODI transforms jobs-to-be-done theory into a practical method for understanding just who is your customer and an effective process for innovation and growth.
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Choose from a dozen case studies with companies such as Microsoft, Ingersoll Rand, Bosch, and others, and learn how we apply our ODI methodology to identify just who is your customer and help companies grow.
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