Don't confuse price and value

When you’re thinking about selling your product or services, it’s common for new entrepreneurs to relate this to the value they create.

Acme could make $500 million by expanding into Foo Widgets. Therefore they’d happily pay us $1 million to help them do that. We’d be creating so much value for them.

That’s value. But value and price are not really related in modern capitalist systems. You choose whether or not to buy something based on its price, not the value it brings you. Price is set by classic supply/demand tradeoffs. If lots of people are able and willing to offer something, it’s probably cheap. If only a few people can or will do something, it’s probably expensive (as long as there is demand).

A few decades ago, people were happily paying 10x the cost of a modern top-range smartphone or laptop for much less technology. Your phone and laptop probably create a ton of value for you, but they’re relatively cheap. Because it’s a competitive market, you’d never pay $10k for a phone.

When a business decides to buy a platform or service, they are similarly thinking about price, not value.

Even if you have a brand new concept with no competitors, the alternative to paying you is probably paying someone else, not doing nothing.

So while you can try sales tactics like “for less than the price of coffee per month”, you should keep in mind that that isn’t how people make purchasing decisions. A more successful pitch is often “alternative A costs X and provides Y, while our offer costs X-A and provides Y+B”.