What Value Does Your Business Offer? The Value Proposition

The Value Proposition is the tangle and intangible aspects of what your business offers. It is comprised of your product or service and the additional value and benefits your customers derive from it. In short, it is the primary reason the customer chooses to pay for what you are selling. The Value Proposition is the first segment in the Business Model Canvas or "BMC" (see blog post here for further information on the BMC).


See the following video for a brief explanation using a well-known company, Starbucks:


Types of Value Propositions:


There are a variety of different value propositions that products and services may have. As a business owner, your business success is largely determined by how well your value proposition satisfies customers’ needs. Your product or service may have one primary value proposition, or it may have several. Listed below are just some of the value propositions your product or service may offer.

See if you can come up with examples of each as you read about them.

  • Newness: Some value propositions satisfy an entirely new set of needs that customers previously didn’t perceive because it wasn’t ever an option. A customer who buys your product may simply do so because it is new.

  • Performance: Improving product/service performance is a common way to create value. Essentially, you are offering a better version of an already-established product or service.

  • Customization: Tailoring a product or service to the specific needs of a customer or customer segments.

  • Getting the Job Done”: Value can be created simply by helping a customer get a job done.

  • Design: A product may stand out because it has a superior design. This is very important in the fashion and electronics industries.

  • Brand/Status: Customers may find value in owning or displaying a product with your brand. This doesn’t necessarily entail simply liking a brand, but rather the value that brand name brings a customer, in terms of outside appearance to others.

  • Price: Offering the lowest price is a common value proposition, but it can also detract from your other propositions by forcing you to skimp on various features or services. Sometimes, a high price can demonstrate added value. There are advantages to appealing to the price-conscious consumer as well as to the high spender.

  • Cost Reduction: Cost reduction is about helping the customer reduce costs. This can largely be in the sense of business-to-business sales, but also can be found in selling to consumers.

  • Risk Reduction/Reliability: Customers value reducing the risks they incur when purchasing products or services. Car dealerships and high-end electronics retailers often do these warranties and service-level guarantees.

  • Accessibility: Allowing people who previously didn’t have access to a product to now have access to a product. (i.e. Timeshares, mutual funds, etc.)

  • Convenience/Usability: Making things convenient and easy-to-use provides immense value for customers. Devices like Apple’s iPod and iPhone are heavily driven by this value proposition.

At some point, your value proposition should boil down to whether to not your product

or service is solving a problem. For your customer, you need to satisfy a need or solve a

problem, even if this need or problem isn’t something that the customer already knew

they needed satisfied or solved.


Have additional questions? Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. You can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1.


Return Home

Continue to Build Playbook