Build Vitamins, Not Painkillers.

March 26, 2013 10:46 am

The Painkillers Vs Vitamins discussion is actually a very deep one. It is a very tricky choice for anyone trying to build a product or service – this quote from Don Dodge: “There are a list of questions I ask entrepreneurs when evaluating start-ups. One of them is “Is your product a Vitamin (nice to have) or a painkiller (got to have it)? Of course everyone wants to think their product is a “must have” painkiller, but very few are.”.

It seems to be a no-brainer argument, until you think about this: because painkillers are needed so much, a lot of people would make them. Which would have the impact of moving the prices to a cost-plus model inevitably. You can have a healthy business that way, but not a huge success. What is the solution? What kind of products give you the kind of pricing flexibility to move totally away from a cost-plus model?

The answer, strangely enough, is to build vitamins. There is a risk of the product or service not taking off – after all, it is not a painkiller so people do not necessarily need it – but if you make a vitamin and people like it, yo can charge at will. Why? Because, while competitors will emerge, no two vitamins are the same – the perceived benefits are totally different and this fact can be built into the marketing message, thereby protecting your prices. And in most cases, a new vitamin would also mean a new category with huge ‘winner takes all’ effects.

Let us take a few examples. Apple’s products come to mind – nobody ‘needed’ an iPad. Steve Jobs invented the category and priced it at will (like he generally does). Who wanted to tweet? As a result, nobody knows how to price a tweet. Another example is Zynga. Paying dollars to buy farmcash – you can essentially price at will. There will be other vitamins (farms) but Farmville is Farmville.

Build A Vitamin. If People Like It, You Can Charge At Will.

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