Captain’s log, stardate 20210219
There are problems and there are solutions.
They can be easy to conflate but they are not the same thing.
Heartburn is a problem.
Tums is a solution.
Not the same thing.
Both problems and solutions can be inexpensive or expensive.
Here’s the breakdown:
Inexpensive Problems - Some problems are mild annoyances, so the sufferer will probably not pay a lot of money to make them go away. (e.g., heartburn)
Expensive Problems - Some problems are extremely painful, so the sufferer will gladly pay lots of money to make them go away fast. (e.g., heart attack)
Inexpensive Solutions - Some solutions are fairly trivial to provide, so the provider doesn’t have to charge much money to make a profit. (e.g., antacid tablets)
Expensive Solutions - Some solutions are extremely laborious to deliver, so the provider has to charge lots of money to make it worth their time. (e.g., triple bypass surgery)
You can combine problems and solutions in novel ways.
Some problems have more than one type of solution.
Some solutions fix more than one type of problem.
If you map out all four possible combinations of expensive vs inexpensive problems and solutions, it looks like this:
Inexpensive Problem plus Inexpensive Solution equals low revenue and low profit.
Inexpensive Problem plus Expensive Solution equals no sale.
Expensive Problem plus Expensive Solution equals high revenue but low profit.
Expensive Problem plus Inexpensive Solution equals high revenue and high profit.
What’s the takeaway from all this?
If you’re exclusively selling services, you should be shooting for 4.
If you’re open to the idea of selling products, number 1 is a good choice because it scales up well.
Do 3 while you’re figuring out how to move to 1 and/or 4.
Avoid 2 at all costs.