20% of Features Drive 80% of Willingness to Pay

The 20/80 axiom reveals that in tech products, a small portion of features drives most of the value perception and pricing power, yet founders often give away this value too easily.

Core Principle

• 20% of what you build drives 80% of the willingness to pay
• Ironically, this 20% is often the easiest part to build
• Many founders put this valuable 20% out in the market almost for free
• They then chase their tails building the remaining 80% that only drives 20% of willingness to pay

Strategic Implications

Product Development

• Focus development resources on identifying and building the high-value 20% features
• Conduct willingness-to-pay research before building to identify these features
• Redefine MVP as "Most Valuable Product" rather than "Minimum Viable Product"
• Be thoughtful about what you're giving away in early product versions

Pricing Strategy

• Don't anchor yourself on a low price point early (especially for AI products)
• If you've trained customers to expect high value at low prices, you've "given the farm away"
• Structure your pricing to capture appropriate value from the most valuable features
• Use the high-value features as expansion opportunities in a land-and-expand strategy

Market Positioning

• Communicate the value of your core 20% features clearly in marketing
• Position your product based on the outcomes these features deliver, not just the features themselves
• Consider using the high-value features to differentiate premium tiers in your pricing model

Application

This principle is particularly critical for AI companies that need to master monetization from day one, as they often deliver significant value that should be properly priced rather than undermonetized with traditional SaaS pricing approaches.