September 20, 2025

The “Upside-Down Value” Scenario

If you are a knitter, you know that it takes about 40 hours and probably seven skeins of yarn to hand-knit an adult-sized sweater.

Assuming a low hourly wage (say, $10/hr) and decent wool yarn (say, $20 per skein), the knitter would have to sell the sweater for $540 just to break even!

Now lemme ask...

When was the last time you spent over five hundred bucks on a sweater?

Probably never.

A hand-knit sweater just isn’t worth that much to most people.

And there’s basically no way to lower the cost of the time and materials.

So we’re left with an “upside-down value” scenario.

In other words...

What it’s worth to the buyer (i.e., the VALUE) is LOWER than what it COSTS the seller to make, so it is impossible to set a PRICE that is acceptable to both parties.

In order to set a PRICE that is acceptable to both parties, the VALUE to the buyer has to be HIGHER than the COST to the seller.

i.e., VALUE > PRICE > COST

Here’s the thing...

Coming at value pricing from a solution-first perspective (e.g., “I want to sell hand-coded websites!”) is hard when the cost of production is high for the seller and the value of the solution is low for the buyer.

What do you do instead?

Figure out what problem the buyer is trying to solve and come up with a way to solve it that is 10x cheaper for you to deliver.

Yours,

—J

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