A value ladder is the sequence of steps a customer takes to get from never having heard of you to buying the thing you are best at — in an order that makes sense from their side of the table rather than yours.
A stranger is unlikely to spend twenty thousand pounds on the strength of a website, but will take a small step, and then another, if each one is small enough to take and useful once taken.
What is a value ladder?
A ladder is a route rather than a price list, designed so that finishing one rung leaves the customer at the foot of the next one with a reason to climb.
Each next offer should feel like the natural consequence of the last one.
What are the rungs?
The taster
The taster is free and shows you know your subject. It needs a defined next step behind it.
The entry offer
The entry offer is small enough to buy on a whim and real enough to be paid for. It is often missing, and it matters because a paying customer behaves differently from a free one and shows you what people will pay for.
The core offer
The core offer is what you are known for and where most of your capacity goes. Many owners have this rung and little else.
The premium offer
The premium offer is for customers who want the whole problem taken away. It has to exist on paper before anybody can buy it.
The ongoing relationship
Maintenance, membership, reviews or a retainer keep the customer from having to be won again next year.
Why this matters to an owner
You pay to acquire a customer once, and later sales to them carry no marketing cost. A business with one rung has to find new customers every month to stand still; a business with four rungs sells to people who already trust it.
If you only sell one thing, the market can only think of you as one thing. The firm known for the cheap job never gets invited to the big one, because the customer does not know it is available.
The gap between rungs is where climbing stops
Broken ladders are often missing rungs in the middle. Somebody buys a small piece of work, has a good experience, and the only other thing on offer is thirty times the price. Many people will not make that jump; they stay where they are or find somebody whose next step is smaller.
A working rule: if the next rung costs more than roughly three to five times the last one, expect very few people to make the move without something in between. The trust required has not been earned in increments.
How to use it this month
- Draw your rungs on one sheet, cheapest at the bottom, with real prices.
- Find the jump. Wherever the next rung is more than about four times the last, that is where people stop climbing.
- Build the entry rung before another free taster. A small paid offer separates the curious from the committed and teaches you what people will pay for.
- Take last year's customer list and mark who is on which rung. Customers still on rung one after two years may not have been offered anything else.
- Design the top rung deliberately. What would you sell to a customer who wanted the whole problem removed and had a budget? Write it down; until it exists on paper you cannot sell it.
- Put one sentence at the end of every delivery. When a piece of work finishes, the customer should hear what the sensible next step is — a recommendation from somebody who has just seen their situation up close.
The mistakes to watch for
The first mistake is building the ladder around your own convenience rather than the customer’s decision. The rungs get set by what is easy to deliver, or by what the business has always done, and then owners conclude the market will not go higher.
The second is a free taster with nothing behind it. Giving away a guide, an audit or an hour of your time is fine, but with no defined next step at a sensible price you get thanked a great deal and paid rarely.
The third is leading with the top rung because it is the most profitable. It requires the most trust, which an advert cannot supply.
Questions to ask yourself
- Out of 10, how deliberately designed is the order in which your customers are asked to buy?
- What is the biggest price jump on your ladder, and what could sit in the middle of it?
- How many of last year's customers bought more than once, and what did you do to make the second purchase easy?
- If a customer wanted to give you five times as much money, what exactly would you sell them?
Designing the ladder is part of Business Coaching. Read it with Wants vs Needs, which tells you what each rung has to be about from the buyer's side, and The 5 Ways, which shows what extra transactions and a higher average sale do to profit. The full set is in the Mindsets library.
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Frequently asked questions
How many rungs should a value ladder have?
Enough that no step is more than roughly three to five times the one below it, which for most small businesses means four or five in total. Draw what you sell with real prices, cheapest at the bottom, and look for the gap. If somebody buys a small piece of work and the only other thing on offer is thirty times the price, that gap is where climbing stops, and adding a rung in the middle will do more than adding one at either end. The right number of rungs is the number that makes each next step easy to say yes to.
Should I offer a free taster?
Yes, provided something specific sits behind it. A guide, an audit or an hour of your time does a real job: it shows a stranger what you know. The failure is a taster with no defined next step at a sensible price, because then you get thanked a great deal and paid rarely. If you have to choose where to spend your effort, build the small paid offer first. A paying customer behaves differently from a free one and teaches you what people will pay for.
What if my business only sells one thing?
Then the market can only think of you as that one thing. The firm known for the cheap job never gets invited to the big one, because the customer does not know it is available. Start at the top rather than the bottom: write down what you would sell to somebody who wanted the whole problem removed and had a budget for it. Until that offer exists on paper you cannot sell it. Then add a smaller paid step underneath your core work so new buyers have a way in.