value-sticklisted

# Value Stick Analysis ## When to Apply - Pricing decisions or reviews - Customer says "too expensive" - Margin analysis or improvement needed - Multi-tier or freemium pricing strategy - Strategy Kernel diagnosis involving revenue or pricing ## Core Framework ### 4-Layer Model ``` WTP (Willingness To Pay) ----------- top of stick | | Customer Delight = WTP - Price | (surplus given to customers) | Price --------------------------------- | | Firm Margin = Price - Cost | (what the company keeps) | Cost ---------------------------------- | | Employee/Supplier Satisfaction = Cost - WTS | (surplus given to workers/suppliers) | WTS (Willingness To Sell) ----------- bottom of stick ``` All strategy reduces to this single bar. Everything — pricing, compensation, supplier negotiation — is how the bar is sliced. ### Value Stick Diagnostic When revenue, pricing, or margin issues surface, diagnose: ``` WTP (estimated from conversations + alternatives): $200/mo Price (actual): $49/mo Cost (COGS + SGA per customer): $30/mo WTS (min suppliers/employees accept): $20/mo Customer Delight: $200 - $49 = $151 (giving away 76% of value) Firm Margin: $49 - $30 = $19 (capturing only 11%) Supplier Surplus: $30 - $20 = $10 ``` ### 3 Diagnostic Patterns | Pattern | Diagnosis | Response | |---|---|---| | **WTP too low** (stick too short) | Customers don't value product enough | "Not