Mapping Pricing to the Job to be Done

Let’s say the jobs to be done is saving you time. The product is a CRM that’s going to reduce the manual input of your sales team by two hours per day per sales rep. What’s the hourly rate multiplied by two hours, multiplied by the number of salespeople?

The amount of money the customer saves in a month multiplied by 12 months is the total amount of money our platform would save the customer.

So the the price for the platform has to be smaller than the amount of money saved, right?

That’s a really straight forward example of measuring the value of the problem you solve, mapped against the job to be done.

Typically it can be anywhere between 10 and 50% of the cost saving, depending on a few other variables.

Things like:

• How easy is it to onboard?
• How easy is it to implement?
• What’s the contract length?
• What’s the risk that this won’t deliver the value I expect?
• What’s the training look like?

But what about more complex problems and jobs solved…

How do you figure the value of a job?

It’s typically an internal process where you’re interviewing customers, surveying them, and trying to understand their jobs to be done and the value of a solution. It’s can be as simple as:

Oren: “OK, Jane, You want to 2X your income this year. What’s a product worth to you that helps you 2X your income?”

Jane: “$100k”

Oren: “If I charge $50k for the product, would you be willing to pay that?”

Jane: “No.”

Oren: “Why?”

Jane: “Because I’d be paying you the exact same increase that I’m earning, and I’m not happy with that.”

Oren: “OK, how about 25k. Would you be willing to pay that for that?”

Jane: “Sure, because I pay you $25k to double my income by $100k, then I don’t have to pay you next year.”

That’s a simplification of the process, but you get the idea. It’s essentially understanding:

• Do you value this?
• Would you be willing to pay?
• How much are you willing to pay?

And pricing can vary from segment to segment

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The image above is about understanding that the jobs to be done framework varies from customer to customer segment.

If you’re targeting an SMB segment with your product and offer a certain feature set, your pricing is going to be markedly different than if you’re attacking mid-market, and different again if you’re attacking Enterprise.

And then if you’re going after Asia-Pacific versus North America, you’ll have different pricing yet again.

Obviously, the more severe the problem, the more you can charge. The more unique you are at solving the problem, the more you can charge. The more commoditised you are, and the smaller and less meaningful the problem, the less you can charge.

That’s why social media management tools aren’t very expensive.

The ability to automate scheduling, how does that tie impact profit? For most people, it doesn’t. That’s why it’s not priced high.

And, because those tools don’t solve a particularly complex problem, there are more competitors in the market, which means a commoditisation of the offer, which leads to a low priced product.

Meltwater buck that trend. They charge a lot more than the likes of Hootsuite and Socialpilot. So much so that you need to book a call to get a price. It’s an enterprise level tool.

How do they charge so much when their competition are commoditised?

They build a product that solves a more meaningful problem

Where tools like Hootsuite help you schedule posts, Meltwater help you ‘unlock your competitive edge.’

Their tool analyses a large amount of public data to help you monitor brand mentions, measure PR effectiveness, and develop data-driven insights on media strategies. It’s particularly geared towards PR firms and professionals.

It’s AI driven and essentially helps you draw insight, and that insight helps PR firms and professionals spot things that a human might otherwise miss.

Where other tools focus on scheduling, Meltwater moves upstream and helps customers make informed business decisions, and Meltwater can subsequently hook the value of their product to the outcome of making a good PR decision.

And you can price in increments, too

Many SaaS have different pricing for Bolt-ons, and if you think about it, they’re meeting different jobs to be done. The reason you need that extra data bolt on and you’re willing to pay for it is because you have that extra specific micro problem that you’re willing to pay to solve.

And that’s how a lot of pricing and SaaS is actually done. It’s broken down and bundled into micro problems, which is why they have tiers with features.

So you typically have this dual, fixed pricing for some amount of features and then additional add ons at a separate price.

Do you see the pattern with this and previous emails? How all these elements in an offer connect to one another? The job to be done informs the value proposition, which then informs the pricing and the terms, and then the terms and pricing subsequently inform the value proposition.

An offer is an interconnected system.

There’s a core piece of the system we’ve not covered yet. That’s coming in the next article.