Calculating the price of a new product feature

Pricing a new product feature often feels like guesswork. Teams estimate build costs, apply a margin, and hope the number lands somewhere reasonable. The problem? Cost has very little to do with what customers are actually willing to pay.

A better starting point is understanding the customer’s business case—the measurable value your feature generates for them over time.

Let’s break down how this works.

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Start by plotting cost and perceived customer value

To understand pricing power, you first map two things:

1. Your total cost of the feature

2. The perceived value the feature creates

Both start at zero and, in theory, can scale infinitely. The currency doesn’t matter here — we’re talking in relative terms.

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First, look at your total cost over a realistic period, such as a year. This includes constant costs (like maintenance) and dynamic costs (like usage-based infrastructure).

Now shift to the customer’s perspective. Over the same time period, you want the perceived value of the feature to be many times higher than the cost. Note that you will have to divide the cost by the number of users or customers of your product or feature, since the perceived cost is also per user or customer.

The gap between the cost and the perceived value is your pricing power — the zone where your price can land while still creating a profitable feature.

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Don’t price too close to perceived value

It’s tempting to set your price as high as possible. After all, if a customer perceives €10,000 in value, why not charge €9,500?

Because your customer has a business case of their own.

They want to recover their investment quickly, whether the feature generates revenue, reduces manual work, or automates a costly process. The larger the difference between perceived value and your price, the easier it is for them to say yes.

This is the customer business case, the true driver of purchase decisions.

A strong customer business case means:

• Faster time-to-yes

• Lower friction in the sales process

• Higher long-term satisfaction

• Stronger retention and expansion opportunities

Pricing too high compresses the customer business case and slows everything down.

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Why this model works

This cost-value-price approach is especially useful in business automation, where intangible benefits can be hard to quantify. By aligning pricing with measurable business outcomes, you avoid guesswork and create a model that supports sustainable growth.

It’s also a powerful tool for product teams. Instead of debating arbitrary price points, you anchor pricing in:

• Internal ROI

• Customer-perceived value

• Customer ROI

• Long-term scalability

This makes the conversation clearer for both your team and your customers.