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.