“How to value price your product”
“How to price on value”
Steps
- Estimate your customer’s cash in without your product
- Estimate your customer’s cash out without your product
- Calculate your customer’s total cash out without your product. Total cash out without your product = cash out without your product
- Calculate your customer’s cash flow without your product. Cash flow without your product = cash in without your product – total cash out without your product
- Set a target multiple
- Calculate your customer’s cash flow with your product. Cash flow with your product = cash flow without your product * multiple
- Estimate your customer’s cash in with your product
- Calculate your customer’s total cash out with your product. Total cash out with your product = cash in with your product – cash flow with your product
- Estimate your customer’s cash out with your product
- Calculate your product’s price. Price = total cash out with your product – cash out with your product