Value Creation Check (WTP-WTS)

Work out how much value your offer creates for one customer segment, who ends up with it (customers, you, or your suppliers and staff), and which moves make the total bigger instead of just shifting who gets what.

Evidence: strong logic, thin field evidence. The idea of added value bounding what a firm can capture is a formal model (Brandenburger & Stuart, 1996), not an empirical finding. The terms willingness to pay and willingness to sell are this library's way of making it fillable. Numbers in this template are illustrative.

Use it when:

• You are choosing between strategic options and want to know which ones create value rather than just move price.
• Pricing is contested: customers say you cost too much, or you suspect you give away value you create.
• You run a business or a function and want to know whether your suppliers and staff are being squeezed to hit your margin.

Skip it when:

• You need the unit-level maths of what one sale earns: use 5.3 Unit Economics Sheet.
• You are setting a price and need a method for it: use 6.22 Pricing Your Offer, then come back to test the options.

Brandenburger and Stuart (1996) built a formal model of how much value a firm creates together with its buyers and suppliers. Under stated conditions, the firm's added value bounds what it can capture. It is a derived result, not a field test.

This template lays it out as a stick. At the top is the most the customer would pay (willingness to pay), then your price, then your cost, then the least your suppliers and employees would accept (willingness to sell). The whole length is the value created. Two things follow. A move that only changes price moves value between you and the customer and invites retaliation; a genuine move raises the top or lowers the bottom. And suppliers and staff are half the stick: a firm can be strong by being a better customer and employer, while squeezing partners only borrows from them.

Pick one offer and one segment. Estimate the four points and write down what each estimate rests on.

Offer: Customer segment:

Strong answer: (illustrative numbers) "WTP: 14 per lunch, because the next best option for these offices costs 13 to 15 including the trip. Evidence: three lost-deal interviews." Not: "WTP: customers value us highly."

The three slices:

• Customer delight (WTP minus price):
• Your margin (price minus cost):
• Supplier and employee surplus (cost minus WTS):

Evidence quality for WTP: ☐ real offers or purchases ☐ price tests or churn at price changes ☐ win and loss interviews ☐ survey answers only (treat as a guess)

Illustrative example: the company and all numbers are made up.

A Norwegian firm delivers prepared lunches to small offices. Section 1: per lunch, WTP is 14 (the next best option costs 13 to 15 with the trip), price 11, cost 8, WTS 6. Delight is 3, margin 3, supplier and staff surplus 2, total stick 8. Evidence is three lost-deal interviews, so WTP is rough. Section 2: raise WTP with a fixed delivery window that office managers can promise staff; lower WTS by giving the kitchen steady weekly volumes, so it accepts a lower rate. Section 3: "cut price to 10" only moves 1 from margin to customer and fails; "fixed window plus steady volumes" widens the stick at both ends. Section 4: offer the fixed window to ten offices at a small surcharge.