To support its sustainability strategy, a specialty chemicals company had developed a new low-VOC coating system for customers under regulatory pressure. The technical proof was strong, the sustainability logic was clear, and the value story made a lot of sense. Because of the value points, the business case included a price premium over existing solutions.
The initiative sponsor had invited me into a progress meeting. The first part of the meeting felt calm. The product lead showed encouraging real-life performance data.
Marketing shared positive data from a customer survey. Sustainability explained why the new system would help customers meet upcoming requirements without disrupting their production systems.
Then the commercial lead opened the notes from the latest in-depth customer interviews. One customer praised the coating, then asked for price parity. Another called the system “strategically relevant,” then moved the discussion to supply security. A third asked whether the current coating line was “good enough for now.”
The mood changed. The value case was no longer the same as the willingness-to-pay case.
I asked the team to leave the customer comments on the screen. Praise was visible in every line. So was the absence of a clear price signal. Then I wrote one sentence on the whiteboard: “For this system to scale, customers pay for sustainability before regulation forces them to switch.”
Until then, the discussion had been about value: better claims, stronger technical proof, clearer sustainability arguments. Useful work. But none of it touched the key assumption.
The team had validated performance. They had not yet validated price capture. After that, the price premium in the business case looked different. The number was still there. The evidence behind the number was not.
Questions senior managers often ask in this context:
How do we know if our premium price is realistic?
A premium price is realistic when customers do more than praise the product. They accept the commercial logic, involve budget owners, compare the premium against business impact, and show willingness to fund the higher price in real buying conversations.
Why do customers value a better product but still refuse to pay more?
Customers may value a better product but still reject the premium if the improvement is not urgent enough, financially strong enough, or strategically important enough to justify switching from the current solution. Better does not automatically mean worth paying more for.
What evidence should we require before approving a premium-price business case?
Before approving the business case, senior managers should require evidence that customers accept the assumed premium. Useful signals include price-specific feedback, budget-owner involvement, paid pilots at the target price, procurement discussions, and customer business cases that justify paying more.