VPC Framework

VPC Framework

(Source: Positive Tenacity)

Definitions:

• Value: This is the value your offering is creating and delivering to customers.
• Price: This is the price you charge and customers pay for to acquire or use your offering.
• Cost: This is the cost of creating and delivering your offering to the customer.

The differences between these elements create the benefits:

• The difference between Value and Price is the Customer Benefit
• The difference between Price and Cost is the Company Benefit

The wider the gap between V and P, the greater the benefit for the customer is and vice-versa. Same goes with the company benefit.

There are 3 actions your company can take to increase or decrease the benefit, and finding the right balance is really the key:

• Increasing Value: By developing richer features, launching new products, providing best practices and white papers, customer success and various service programs are all items that increase the value of your offering.
• Increasing/decreasing Price: Based on the position of your product, pricing model changes, increasing/decreasing switching costs, better documentation and guides all impact your pricing.
• Lowering Cost: Optimizing servers, reaching economy of scale, better brand/product awareness leading to lower cost of acquisition, better employer brand leading to easier talent attraction and better retention, all impact your overall costs.