Monetizing Innovation

Recommendation: Identify the price thresholds for your products and stay on the cliff.

If your product delivered more value than you thought customers were expecting, raise your price. But do it carefully, and in several steps. We've seen this happen many times. In the 1970s, Mercedes introduced a new SL car. The model sold out in a few months, and would-be customers were put on a waiting list of two years! Mercedes learned its mista

The most successful product innovators we know start by determining what the customer values and what they are willing to pay, and then they design the products around these inputs and have a clear monetization strategy that they follow through with.

The value chain has changed. The customer is no longer just the buyer but also a co-creator. Co-creation, crowdfunding, and customization can lend a deeper value to the pricing.

Innovations get skewed to do the jobs that executives want them to do—which is to confirm that the customers want to buy the products that the managers want to sell them.

Powerful buyers will force prices down or demand more value in the product, thus capturing more of the value for themselves.