value metric
The unit that grows when a customer gets more value from the product, such as bookings or cars served per month. Tying prices or plan limits to it lets revenue grow together with customer success.
A value metric is the unit a price is attached to, chosen so that it grows when the customer gets more value from the product: per location, per booking, per active user, per car served. It answers the pricing question "per what?" before the question "how much?".
A good value metric does three things. Customers understand it and can predict their bill. It grows with the customer's success, so revenue grows with them without renegotiating (this is how expansion revenue and negative churn happen). And it doesn't punish the behavior you want: charging per reminder sent would make shops send fewer reminders, the opposite of what brings their customers back.
Small products often start with a flat price per account, which is fine while customers are similar. A value metric starts to matter when customers differ a lot in size: a two-bay garage and a 40-shop franchise shouldn't pay the same. Changing the metric later is disruptive, so it's worth thinking about early, even if the first price list has just one number.
Example
GarageDesk charges per shop: 600 UAH a month for each location (750 UAH for new shops from year 2). The founders consider alternatives:
- Per reminder sent: shops would send fewer reminders to save money, and fewer cars would come back. Rejected.
- Per returned car: closest to the value, but hard to verify and unpredictable for the owner. Rejected for now.
- Per shop (location): easy to understand, and it grows when a customer grows. When a franchise wants its shops connected, each shop signs up on its own at a volume price of 450 UAH, so revenue grows with every location that joins.
Common mistakes
- A metric that punishes usage. If using the product more costs more, customers use it less.
- A metric customers can't predict. Surprise bills cause churn.
- Too many metrics at once. Per user plus per location plus per message confuses everyone.
- Ignoring size differences. One flat price for customers ten times apart leaves money on the table at the top and scares off the bottom.