Value Capture
Price
The monetary consideration the customer is asked to pay, and the terms on which they pay it.
Price is not simply another Toll to subtract. Price is what the resulting Value must justify. On its own terms and, where relevant, against the Best Alternative. Price is also the principal instrument of Value Capture.
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Related concepts
Value
The value created and realized for this customer by the offer: the Promise discounted by Credibility and diminished by Toll.
Toll
Toll is everything other than Price the customer must bear to obtain and realize the Promise.
Value Margin
The spread between Value and Cost: Value − Cost.
Value Capture
The portion of the Value created that the business ultimately captures, principally through Price and the rest of the offer economics.
Market of One
A Market of One exists when an offer is sufficiently distinct in the customer's decision that no readily substitutable alternative provides the same relevant configuration of Value.
How this concept behaves
Qualitative relationships from the framework registry. None of these are formulas.
Offer · evaluated through · Promise, Credibility, Toll, Price, Market Alternatives, Decision Context
An offer is evaluated through Promise, Credibility, Toll, Price, comparison with market alternatives, and Decision Context.
Price · justified by · Value
Price is not another Toll; Price is what the resulting Value must justify.
Value Margin · prioritizes · Price
Value Margin is Value minus Cost; it is used to prioritize offer improvements before pricing optimization.
Price · captured through · Value Capture
Price is the principal mechanism of Value Capture: it is what the customer pays, and therefore how the business retains a portion of the Value created.
Value Capture · captured through · Value Margin, Price
Value Capture is the share of the created economic value the business retains, expressed principally through Price. It follows Value Creation and is distinct from the margin itself.
Where this concept is treated at length
What is an Offer?
An offer is more than a product or price. It is the complete structure of the exchange between a customer and a seller.
Why Are Offer Problems So Often Misdiagnosed as Copy Problems?
Many conversion problems are blamed on copy when the real problem is the structure of the offer itself. Learn how to tell the difference.
Market of One: The Gate to Value-Based Pricing
A Market of One exists when no readily substitutable alternative provides the same relevant configuration of Value. How reducing substitutability lets Value, rather than category Price, become the basis of the customer's choice and of pricing.
Bundling
The arrangement of Value elements into a configuration that makes direct comparison with available alternatives difficult.
Toll: Everything the Customer Must Bear Beyond Price
In Offer Physics, Toll is everything other than Price the customer must bear to obtain and realize the Promise: time, effort, learning, setup, coordination, attention, switching, lock-in, maintenance, opportunity cost and risk.
Value Creation: Why Adding Value Is Not Enough
Value Creation has two halves: first imagine Value for the customer unconstrained by Cost, then engineer and select against Cost using Value Margin, where the design test is whether a change increases Value by more than it increases Cost.
Value Margin: Create More Value Than It Costs to Deliver
Value Margin is the spread between Value and Cost. A canonical treatment of why adding value is not enough, how Value Margin governs the engineering phase of Value Creation, and the levers that widen the spread.
Price
Price is the final stage in Offer Physics, set only after Market of One, Value, and Value Margin are established. A canonical treatment of why price trails value, the floor and ceiling that bound it, and the most common pricing failure modes.
Where to use this
Offer Builder
Build offers from preset choices and watch the tradeoffs move.
Value Margin
Interactive treatment of Value, Cost, Value Margin and Value Capture.
Free Offer Diagnostic
A structured read of where your offer's own structure helps or hurts the decision.