What is Economic Values?

Economic Values is a mental model used for better thinking and decision-making.

How do you apply Economic Values?

To apply Economic Values, identify situations where this framework is relevant, then use it as a lens to evaluate your options and decisions. The model is most useful when combined with other complementary mental models.

What category does Economic Values fall under?

Economic Values falls under the Business & Strategy category of mental models. Other models in this category can be found on the Business & Strategy hub page.

Why is Economic Values important?

Economic Values is important because it provides a structured way to think about problems that would otherwise be approached with intuition alone. Understanding this model helps you avoid common reasoning errors and make better decisions.

Economic Values Mental Model…

Economic Values Mental Model… | Faster Than Normal

Section 2

How to See It

Positioning

You're seeing Economic Values when a company defines its offer in terms of the value type (e.g. “we sell time back,” “we sell certainty”) and messaging and pricing align to that value rather than to features.

Pricing

You're seeing Economic Values when pricing is tied to the value delivered (outcome, result, risk reduced) instead of cost-plus or feature tiers, and willingness to pay or deal size improves.

Product

You're seeing Economic Values when roadmaps and prioritization are framed by “what value do we add?” (e.g. speed, simplicity, status) and features are evaluated by contribution to that value.

Section 3

How to Use It

Name the economic value(s) you create: what state or outcome does the customer get? (Convenience, certainty, status, access, savings, experience, etc.) Then align positioning, product, and pricing to that value. Price on value delivered when you can; communicate in value terms so the customer sees what they’re paying for. Revisit when the market or offer changes.

Decision filter

"What economic value do we actually deliver — and have we said it and priced it that way? If we’re selling on features, we may be underclaiming or underpricing the value."

As a founder

Use economic values in positioning: lead with the value type you deliver. In pricing: tie price to value (e.g. % of outcome, risk reduced). In product: prioritize work that increases the core value you’re selling.

Section 5

Founders & Leaders

Charlie MungerVice Chairman, Berkshire Hathaway

Munger insisted on understanding the real value created: “What’s the fundamental reason this business exists and gets paid?” He pushed for clarity on economic value — what’s being exchanged and why it’s worth it — before judging strategy or price. Founders can apply this by explicitly naming the economic value they create and ensuring strategy, messaging, and pricing are built on that foundation.

Section 7

Connected Models

Reinforces

12 Standard Forms of Value

The 12 standard forms of value (product, service, shared resource, subscription, etc.) are a taxonomy of economic value. Economic values as a model is the practice of naming and optimizing for the value you deliver within that frame.

Reinforces

Value-Based Selling

Value-based selling prices and sells on the value delivered to the customer. Economic values clarify what that value is so value-based selling has a clear object.

Tension

Perceived Value

Perceived value is what the customer thinks they’re getting. Economic value is what you intend to deliver. The tension: align communication and experience so perceived value matches the economic value you’re selling.

Section 8

One Key Quote

"Understand the value you're providing. If you can't explain it in terms of the economic value to the customer, you don't understand your business."
— Charlie Munger

Section 11

Summary & Further Reading

Economic values are the forms of value you create and capture. Name them, align positioning and pricing to them, and revisit so strategy stays value-centric.

Value Proposition Design — Alexander Osterwalder et al. (2014)

Book

Mapping value creation and fit; how to articulate and test the value you deliver.

Pricing with Confidence — Reed Holden (2010)

Book

Value-based pricing; linking price to economic value delivered.

The Lean Startup — Eric Ries (2011)

Book

Value hypothesis and learning; testing what value you create before scaling.

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