Most SaaS businesses have a strong sense of what their customers think about their product. They track net promoter scores (NPS), review QBR feedback, and listen carefully to renewal conversations. What’s often missing is a clear picture of what different segments genuinely value, how that varies across the market, and what customers would willingly pay more for if the value were made obvious.
PHG’s monetisation research across 80+ software and technology firms shows that while most understand customer needs at a high level, fewer than 25% translate that into differentiated, appropriately priced service levels. That gap matters more than most businesses realise, and it tends to show up in the revenue line long before it shows up anywhere else.
Consider a simple test. Ask five of your most important customers what they believe they are paying for. Not what the product does technically, but what value they feel they are getting in return for their spend. The range of answers is usually surprising, and it points to something worth taking seriously: when customers struggle to articulate why your product is worth what it costs, you are more exposed on price than you need to be.
The gap between product value and commercial value
Product quality and commercial value are related but distinct. Product quality drives retention and satisfaction. Commercial value, meaning value that customers can articulate and are willing to pay a premium for, depends on something additional: a clear understanding of what specific customers in specific segments care about most, and how they weigh your offering against the alternatives available to them.
Web tracking and analytics company New Relic illustrates this well. For years it sold observability tools through a per-host pricing model and thirteen separate product SKUs. The technology was strong, but the commercial structure worked against adoption: customers would monitor sixty of their hundred hosts and leave the rest unobserved simply to manage costs.
As New Relic’s founder Lew Cirne described it publicly, it was like buying health insurance for two of your three children and hoping the sick one was covered. The pricing model was not aligned with how customers actually experienced value, and growth lagged behind competitors as a result. When the company overhauled its model in 2020, collapsing thirteen products into one platform with usage-based pricing, account growth and data ingestion both accelerated. The product had not changed. The commercial architecture had.
Five customer value blindspots that undermine your Monetisation
When your understanding of customer value is underdeveloped, the effects tend to surface in recognisable ways.
- Product investment that doesn’t flow through to revenue growth
When research focuses primarily on existing customers, the roadmap naturally reflects what those customers have already asked for rather than what the broader market values most.
Over time this can show up as stagnant volume growth, difficulty entering new segments, or new launches that gain less traction than expected. The product improves, but the improvement does not always land where willingness to pay is highest This is typically a signal that value mapping hasn’t kept pace with the roadmap, and investment is not grounded in a full picture of where commercial opportunity sits across the market.
- Development isn’t focused on areas of genuine differentiation
Without a clear map of where your competitive advantage lies, it’s easy to invest in features that customers mention in feedback but do not prioritise when they buy.
Meanwhile the dimensions that genuinely drive buying decisions often receive less attention simply because they are not requested as loudly. Low usage of features the product team thought were important is a common warning. It usually means the team hasn’t mapped differentiation rigorously against what customers actually prioritise when choosing between alternatives.
- Perceived strengths misaligned between business and customer
It’s common for the internal view of what makes a product valuable to differ somewhat from what customers are thinking. A sales teams’ confidence in a product’s strongest attributes is often at odds with what customers actually rely on and value most. When those views are not regularly reconciled, product and commercial decisions get made based on assumptions that have quietly drifted away from market reality.
- Pricing conversations default to price comparison
When a business cannot point to clear, customer-validated evidence of where it outperforms competitors, pricing conversations tend to focus on direct price comparisons. The product may not be weaker but commercial teams lack the evidence to anchor the conversation elsewhere. This leads to more frequent discounting and more pressure on renewals than the underlying product quality would warrant.
- New capabilities monetised as an afterthought, not by design
This pattern is particularly common in SaaS. A feature is built and shipped, and adoption is tracked. The question of how it should be monetised tends to be addressed after the fact, if at all. Features that customers would pay more for get included in standard tiers because no one made the commercial case for treating them differently.
This is the classic consequence of commercial thinking entering product development too late. Offer design happens after the build rather than alongside it, leaving real revenue opportunity on the table.
What the strongest businesses do differently
The businesses that navigate these challenges well share a common approach: they treat the understanding of customer value as a commercial discipline in its own right, not a byproduct of product development or sales feedback. At PHG, we refer to this as the Create phase of monetisation; the foundation that determines how well everything downstream performs. In practice, it comes down to two shifts
- Build a structured picture of customer value
This goes beyond conventional customer research, which typically tells you what existing customers think about existing products.
A more commercially useful exercise asks what the full landscape of value looks like: which needs are not yet being addressed, which segments are underserved, and what matters most to customers when they choose to buy.. When approached as a regular discipline rather than a one-off project, it involves:
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- Research focused on customer needs rather than product features, including buyers who have not yet purchased
- A mapping of the company’s capabilities, as customers actually perceive them, against those needs
- A view of where competitors are stronger or weaker on the dimensions customers most value. A prioritised picture of where the opportunity to improve willingness to pay is greatest
The results are most valuable when they feed directly into product prioritisation and pricing decisions. Clear ownership and the right organisational seniority to act on the findings matter just as much as the quality of the research itself.
- Bring offer design into product development earlier
In many SaaS businesses, pricing is considered after a feature is largely designed. The commercial model gets retrofitted rather than built in from the start.
Shifting that conversation earlier doesn’t mean commercial teams drive the roadmap. It means product decisions are made with a clearer view of where willingness to pay is strongest, how a new feature sits within the existing pricing structure, and whether a different commercial approach is needed to capture the value being created.
Features that warrant a premium are more likely to be recognised and priced accordingly, and the link between product investment and revenue growth becomes easier to trace.
The commercial foundation that makes everything else work
For SaaS leaders and their investors, building a clear understanding of customer value is one of the more underappreciated sources of commercial upside.
The businesses that invest in this seriously find that stronger pricing – better packaging, and more defensible margins follow naturally, because those decisions are being made against a real, rather than assume, picture of what customers value.
AI has made this more rather than less important, and the businesses that treat it as primarily a product challenge are likely to find it becomes a commercial one. The pace at which AI capabilities can be built and replicated means that feature advantages, which once took years to close, can now be neutralised in months. In that environment, the sustainable edge is not what you ship. It is what you know. The businesses that will be most resilient are those that have invested in understanding customer value at a genuinely granular level, by segment, by use case, by outcome, because that knowledge is not something a competitor can replicate from a product changelog or an AI-generated feature set. It has to be built through deliberate, systematic research over time. That is precisely why the Create phase of monetisation, understanding what customers value and will pay for before you build, matters more in an AI era than it ever did before.
If you’d like to explore how your business understands customer value and identify commercial opportunities, we’d love to have a conversation. Get in touch!
This is the first in a series of articles exploring where software businesses lose commercial value, and what the strongest monetisers do differently, from Create, through to how value is aligned, captured, and realised in market.
