Ultimately your product strategy comes down to a choice between being lowest cost or highest value. Which lane does your product travel in?
Don’t make the mistake of drifting into the value lane with a “fake it till you make it” attitude. That won’t get your product very far. Customers are alert to spotting fakes.
Even worse is then flooring the discount pedal to jump into the low-cost lane, i.e., as a last ditch effort to close a sale. Discounts are the most expensive type of value you can give away to a customer. Make that move too often and you’ll get run over by the lowest cost provider truck.
Where to Go In your Product Journey
Two things:
Know your Differentiation: Being the low-cost provider is not an option for most companies because there can only be one in any industry. Instead differentiation is needed to thrive. How well defined is your differentiation? How much is that worth to customers? You can only answer that by quantifying your value. Doing that will give you more room to avoid a nasty discount pileup.
Know your Focus: Your differentiation is probably not universally valued by all customers. Prioritize finding customers who really value it the most. Segmentation can be framed using conventional firmographics (vertical, size, etc) but often a more powerful way is to group customers by use case.
A value model is a useful tool for these tasks and essential for quantifying value. To learn more see:
How to Quantify the Value of your Product
In the previous article, I defined the value for B2B products as follows: