Service businesses often get constrained by deliverable-focused pricing. They price based on what they create, not what it’s worth to the customer. This lesson was learned through experience when operating a video production startup that appeared destined to remain small-scale.
Here’s my full story.
The Challenge
The startup operated by selling video ads for $1,000. That was the complete offering. One-time service. Definitely not scalable.
The business was constrained by the typical service business model where time is traded for money, a product is created, delivered, and the focus moves to the next client. This approach has a ceiling that proves difficult to break through.
The Question
A simple question was posed to one of the customers:
“If I could get you actual users instead of just the video, what would you pay?”
Their response: “At least $5 per install.”
The follow-up: “Okay, if I got you 100K users, you’d pay $500K?”
Their answer: “Easily.”
That was when everything changed.
The Shift
The business model thinking shifted from video production shop to outcome delivery. The money wasn’t in the video. It was in what the video did: user acquisition.
The decision was made to go all-in on changing the business model to focus on outcomes. Instead of selling videos, the focus became selling results. Instead of charging for the creative work, the pricing structure changed to charge for the users delivered.
The Results
After a few years, that same customer was spending $10 million annually with the business.
This wasn’t “value capture.” It was simply asking a better question and aligning the offering with what the market needed. Same customer. Same industry. Completely different scale.
Conclusion
The transformation didn’t happen because core skills changed or new customers were found. The focus simply shifted from the thing that was made to the results it produced. This small change in perspective unlocked massive growth potential.
The fundamental principle: Don’t charge for the deliverable. Charge for the outcome. Customers don’t really want your product or service – they want the results it gives them. When pricing aligns with their desired outcomes, both parties achieve greater success.