Calculating Your Value Metric

Your value proposition is what the customer is buying from you.

Stating it in unit economic terms is called your value metric.

It could be storage space usage, transactions on a marketplace or other.

Sometimes the metric is clearly assessed such as traffic driven to a website while at other times it can be difficult to pin down such driving revenue.

For difficult situations choose a metric that comes closest to capturing it.

In the revenue example, the number of customer visits could be used to track progress.

Identify your value metric and assign a dollar amount to it.

Now you can create a series of pricing levels for the customer.

One pricing strategy is the good, better, best approach.

This gives the user three options to choose from.

If there are too many choices then the customer may find it difficult to decide.

You can also price the product based on value metric usage.  

Assign a value to each unit and then charge based on the usage rate.

Figure out your value proposition and define it in unit economic terms.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.