The two biggest effects on product value — and price

Pain is tempered by a lack of urgency.

Startups get pricing wrong and develop weak value propositions because they don't understand this core concept.

If you've been following me for a while now, you know I love little models. If you've had the... let's just say "experience"... of spending time in a room with me, you'll know I often leave little illustrations strewn throughout.

And so, of course, I have a little model for this, too.

Here it is:

the pain-urgency matrix

It's a simple 2x2 grid to visualize the relationship between severity and urgency in customer value propositions.

On the Y axis, we have the severity of the pain. The higher up, the more painful the problem is.

On the X axis, we have the urgency of the problem. The farther to the right, the more important it is to solve the problem right now.

And that leaves four basic quadrants:

  • Low severity, low urgency. This is commodity land.
  • Low severity, high urgency. This is the cheap crap we have to buy anyway.
  • High security, high urgency. This is where you find the gold mines.
  • High severity, low urgency. This is where a lot of startups get stuck.

Let's break it down.

Low Severity, Low Urgency

These are commodity products.

We may need them, but they don't solve an acute pain, and we don't feel much, if any, urgency in solving it. It's not that we aren't interested in the problem, but we're not that interested in the problem.

Commodity products are easy to replace, tend to have low loyalty, and are typically priced to reflect their relative unimportance.

Startups should largely avoid this space.

Low Severity, High Urgency

These are the items we don't value very much.

We need them, and we need them now, but we don't care much about them. They certainly don't relate in any way to our identity, and have no particular loyalty to the solutions offered.

Sometimes, they're just acquired ad hoc, as needed, and we choose based on what's on the shelf when we need it. Right place, right time products. Nothing more.

This is typically garbage. Even disposable. Sometimes perishable.

Proceed into this quadrant with extreme caution.

High Severity, Low Urgency

This is the quadrant that kills startups.

Customers feel your pain, and it's a big pain. All of your customer validation aligns with their need to solve this problem. On the surface, it looks like an amazing opportunity!

But...

Admiral Ackbar from Star Wars warning that it is a trap

It doesn't matter how big a problem it is if they feel no urgency to solve it.

Sure, it'd be nice to get it solved. But there are so many other priorities on their list that the pain of solving it has not (yet) been eclipsed by the pain of not solving it.

I see this all the time with early-stage startups: you got a cool product, early validation looks good, leads are easy to acquire, and yet the product falls flat.

All of the customers you get in front of are annoyed at the problem and excited about the solution, but they don't buy! They talk a good game, and then they say "not now" --- or even ghost you.

Because you're solving the wrong problem.

It's time for a pivot.

What's the right problem to solve?

High Severity, High Urgency

These are the gold mines.

They're big problems that need solving right now, and customers pay a premium to solve them.

Products that address these needs are often unique --- that's why they're needed. And they're difficult to replace --- because they solve the problem better than the alternatives.

All startups should focus on solving these problems.

This is why it's so crucial during value proposition design to understand the relative value of customers' needs, wants, and fears.

But the mistake many founders make is equating "value" with the severity of the pain. That's a good starting point, but it's more than that. Value is a measure of severity and urgency.

So solve the problems your customers really want solved --- right now.

And price for that value.


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