What are we actually selling?

What are we actually selling? Working on pricing for a CPG client the past few weeks, and the math keeps breaking the same way. Cost of goods is too high. Can't price competitively. Every model we run shows we're 30-40% above competitors.

Classic consultant answer?

"We need to lower COGS or we're dead."

But that's not the important question.

The question is: What are we actually selling?

If you're selling the same thing as everyone else, then yeah—you're in a race to the bottom on price. You lose.

But what if you're not?

—

In 1958, Momofuku Ando launched instant ramen at 35 cents.

That was 6x more than fresh noodles.

Wholesalers rejected it instantly.

"Too expensive. It's a luxury item."

They were right about the price.

Wrong about everything else.

Ando wasn't selling noodles.

In post-war Japan, when food was scarce, he was selling "not standing in line for hours.”

Fresh noodles: cheaper, better quality, 2+ hours in line.

Instant ramen: expensive, weird texture, 2 minutes and you're eating.

Different jobs.

Different value.

The breakthrough wasn't in his backyard shed when he figured out the flash-frying method (though that's a cool story—he got it from watching his wife make tempura).

The breakthrough was realizing he wasn't competing with the ramen stand down the street.

—

Back to my client.

We're not trying to beat competitors on price.

We're asking: what job is our product doing that nothing else can?

Maybe it's time savings.

Maybe it's peace of mind.

Maybe it's status.

Maybe it's "I don't have to think about this anymore."

Whatever it is—that's what we're pricing.

The COGS don't change.

But the comparison set does.

And suddenly the math works differently.

Ando didn't make cheaper noodles.

He made "I need to eat right now and I can't wait" affordable.

Totally different business.

Most pricing problems aren't math problems.

They're framing problems.