Product School

Product Value: How to Define, Measure, and Grow

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Carlos Gonzalez de Villaumbrosia

Founder & CEO at Product School

October 12, 2025 - 16 min read

Updated: October 15, 2025- 16 min read

They say only about 5 % of new products actually succeed. Not because they fail to ship features, but because they don’t crack the code on real value. So let’s start where it matters: what is product value, and how do you make sure you use the product analytics so your product lands in that small slice of winners?

If you’re a PM, product leader, or part of a product team, you already know your job is about creating value. 

In this piece, you'll get a clear definition of product value, a breakdown of its different dimensions, and a toolkit of metrics to track how your product performs. Better yet, you’ll find practical, down-to-earth ideas for boosting value in ways your users notice and appreciate.

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What Is Product Value?

Product value is the benefit a customer gains from using a product, minus the costs, effort, or friction involved in achieving that benefit. In other words, the value of a product is not about the features you build but about the outcomes your users actually realize.

How the value of a product is viewed by customers and businesses

The value of a product has two sides you need to consider simultaneously:

  • Customer value: How much better, faster, or safer does the product help the user achieve their goal? Think reduced time-to-completion, improved confidence, or access to new opportunities.

  • Business value: How much does delivering that customer outcome contribute to revenue growth, user retention, and market share? Think lower churn, higher expansion revenue, or strategic differentiation.

Too often, teams emphasize one side while neglecting the other. The craft of product management lies in balancing both, ensuring customers win while the business thrives.

The monetary value of a product (Economic Value to Customer)

A useful way to think about product value is as a simple ratio:

product value ratio

Benefits can be tangible (time saved, money earned) or intangible (trust, confidence, peace of mind). Cost includes the price, learning curve, switching effort, and all the other resources spent adopting your product.

A more structured version of this thinking is the Economic Value to Customer (EVC) model. It starts by identifying the user’s best alternative, then calculates the added benefit your product provides, and finally subtracts the switching costs. 

This model helps product teams ground discussions of value in numbers instead of opinions, especially when debating monetization strategies or product prioritization.

How do you demonstrate product value?

Product leaders demonstrate product value by showing the measurable outcomes your product delivers — such as time saved, costs reduced, or revenue gained — compared to alternatives. This involves using data, customer stories, and value metrics that directly connect product usage to real-world benefits.

Types of Product Value

Blog image: Product Value

Absolute vs. relative product value

  • Absolute product value is the standalone usefulness of a product. The question is how well it solves the customer’s job without comparison to anything else. For example, a budgeting app that automatically categorizes transactions provides absolute value by saving users time and reducing manual effort.

  • Relative product value is the usefulness of a product compared to the alternatives available. Here, the same budgeting app is judged against competing apps: Is it faster, more accurate, or easier to use? Relative value drives competitive product positioning and explains why two products solving the same job can be valued very differently in the market.

In practice, product managers need to measure both. Absolute value tells you whether your product solves the core job effectively. Relative value shows whether customers will choose you over the competition. This directly influences product adoption and pricing power. When debating roadmaps, relative value often matters more because users rarely evaluate products in isolation.

Real (objective) vs. perceived product value

Real product value refers to the measurable outcomes customers achieve when using a product. Things like time saved, costs reduced, or errors eliminated. It’s what you can quantify in clear before-and-after terms.

Perceived product value is how much value users believe they’re getting. This perception is shaped by product-led onboarding, messaging, product design, and brand reputation. A product may deliver strong real outcomes but still lose customers if the perceived value is low. For instance, if user onboarding drags on and delays time to value, then you have a predicament.

The key insight for product leaders: real value without perceived value leads to churn, while perceived value without real value leads to short-lived growth and eventual disappointment. Your product strategy has to close the gap between the two.

Practical, identity, and social value of a product

Beyond the absolute/relative and real/perceived distinctions, the value of a product can be understood through different dimensions:

  • Practical value: Does the product solve a functional problem or improve efficiency?

  • Identity value: Does the product reinforce the customer’s self-image or professional credibility?

  • Social value: Does the product create connection, status, or recognition within a community or peer group?

This taxonomy is useful because it gives teams a structured way to map features and experiments to specific types of value. For example, collaboration tools often win on social and identity value (being seen as a forward-thinking team), while analytics products lean on practical value.

The habit effect and time-to-value

Product value doesn’t stay static. It often grows as users build habits around it. A fitness app becomes more valuable once daily tracking becomes second nature; a product management tool becomes indispensable once an entire team relies on it. This is the habit effect: value compounds with repeated use.

But habits don’t form if users never reach the first meaningful win. That’s why time-to-value is critical. The faster a product helps users experience its core benefit, the more likely they are to stick. Teams can improve time-to-value by simplifying user onboarding, offering contextual guidance, and highlighting the first successful outcome quickly.

For product managers, measuring both the habit effect (frequency and depth of use over time) and time-to-value (speed of reaching first success) is essential. Together, they reveal whether a product’s value is truly sustainable.

How to Determine Product Value

The value of a product is measured by assessing the outcomes it creates for customers compared to the costs of achieving those outcomes. 

This means looking at a combination of customer-centric metrics (time saved, adoption rates, satisfaction) and business-centric metrics (revenue, retention, expansion). The most reliable way to measure product value is to track a small set of leading and lagging indicators that connect customer success with business performance.

Value metrics that matter most

In product management, a value metric is the unit of measurement that best reflects how customers gain value from a product. Choosing the right value metric ensures pricing, product adoption, and success tracking all align with customer outcomes.

Practical examples include:

  • Storage space used in a cloud platform

  • Transactions processed in a payment app

  • Seats or active users in a collaboration tool

  • Features adopted that drive core outcomes (e.g., dashboards created in a product analytics tool)

These metrics work because they scale directly with the benefit customers receive. Too many metrics create noise; the key lies in identifying one or two that matter most.

Leading indicators of product value

Leading indicators reveal whether customers are on the path to realizing value. These metrics are user-side, and they tend to move before business results do.

  • Activation rate: the percentage of users who reach the first meaningful outcome

  • Time-to-value: how quickly users experience that first outcome

  • Feature adoption: whether customers are engaging with the features that drive core outcomes

  • Task completion time: how much faster or more reliably customers can complete their jobs

  • Product-qualified leads (PQLs): signals that trial or free-tier users are experiencing enough value to justify paying

Tracking these helps product teams intervene early, before churn or disengagement sets in.

Lagging indicators of product value

Lagging indicators capture the business impact once value has been realized. They tell you how product value translates into long-term outcomes.

  • Retention rate and churn: whether customers stick with the product over time

  • Expansion revenue: whether customers are willing to pay more as value grows

  • Customer lifetime value (LTV) and average revenue per account (ARPA): long-term financial impact per user

  • Net Promoter Score (NPS) and CSAT: supporting indicators of satisfaction and likelihood to recommend

Lagging indicators confirm whether product value is sustainable and profitable, but they should never be the only thing tracked — they’re backward-looking.

Relative product value checks

To determine the monetary value of a product in a competitive market, teams need relative benchmarks. Techniques include:

  • Win/loss analysis: understanding why customers choose or reject your product

  • Price-for-performance comparisons: assessing whether your product delivers more outcome per dollar than alternatives

  • Economic Value to Customer (EVC): calculating the extra benefit your product provides compared to the best alternative, minus switching costs

Relative checks keep pricing, positioning, and roadmap debates grounded in reality.

Using qualitative methods to measure product value

Not all aspects of product value can be quantified. Interviews, customer surveys, and usability studies help teams uncover why key metrics move. Frameworks like Jobs-to-be-Done (JTBD) or the Sean Ellis Product-Market Fit survey add context by showing whether users feel they’d be “very disappointed” without the product.

For critical decisions, combining quantitative data with qualitative insights gives the clearest picture of value. Numbers tell you what is happening, but conversations reveal why.

Building a simple product value scorecard

To bring this together, many teams use a product scorecard. A straightforward version might include:

  • Population: how many users are affected

  • Need: how critical the problem is for those users

  • Strategic fit: how well solving this aligns with product goals

  • Expected outcome: measurable improvement for users

  • Confidence level: how sure you are that the outcome will be delivered

Each factor can be scored on a scale (e.g., 1–5), weighted, and then aggregated to guide roadmap decisions. This turns the abstract concept of product value into a concrete, comparable input for product prioritization.

The image below illustrates how this looks in practice. Each column represents one of the five factors, scored numerically. When filled in across multiple opportunities, the scorecard makes trade-offs visible and ensures decisions are grounded in a shared definition of value.

blog image: product scorecard

How to Increase Product Value

The value of a product can be increased by reducing the time and effort customers need to achieve meaningful outcomes. The key is also in improving the quality and reliability of those outcomes and reinforcing the customer’s perception that the product is worth the investment. 

In practice, this means focusing on gaps in the user flow and user journey, enhancing core workflows, and ensuring pricing and product positioning reflect the benefits delivered.

Find and close value gaps

Every product has areas where promised value doesn’t fully materialize. These are value gaps: the moments where users drop off, abandon workflows, or fail to see the intended benefit.

  • Use funnel analysis to pinpoint where users fail to activate or adopt a key feature.

  • Combine cohort data with interviews to understand whether drop-offs are due to missing functionality, confusing UX, or unmet expectations.

  • Quantify gaps in terms of lost outcomes. For example, “30% of sign-ups never complete user onboarding, which means they never see the product, reducing their reporting time.”

Closing value gaps usually delivers faster gains than launching entirely new features.

Reduce time-to-value

Time-to-value is the delay between a user’s first interaction and their first meaningful outcome. The shorter it is, the faster users connect with product value. This directly improves user retention.

  • Streamline product-led onboarding flows to highlight only the actions that lead to a clear win.

  • Use progressive disclosure to avoid overwhelming new users while still surfacing advanced functionality later.

  • Add contextual guidance (tooltips, checklists, or in-app nudges) to guide users to their first success.

Practical example: a SaaS analytics platform reduced its time-to-value by introducing a one-click sample dataset, allowing users to generate their first dashboard in minutes instead of waiting to integrate real data.

Improve core job outcomes

The essence of product value is how well you help customers complete their primary job. Improving that job often delivers more value than building adjacent features.

  • Map your product to the customer’s Job-to-be-Done and identify where the workflow slows down.

  • Focus on speed, accuracy, and reliability of the core workflow.

  • Measure impact with before-and-after task completion times, error rates, or user satisfaction on the specific workflow.

Practical example: a fintech app increased product value by automating error checks on invoices. It’s a small improvement that saved finance teams hours every month.

Trim feature bloat

More features do not always equal more value. Extra options can add cognitive load, slow product adoption, and dilute focus on what matters most.

  • Audit feature usage regularly; features with low adoption and no strategic role are candidates for removal or simplification.

  • Replace rarely used “long-tail” features with integrations or APIs instead of keeping them native.

  • Keep the interface lean so the highest-value workflows stay front and center.

By trimming bloat, you reduce friction and raise the relative value of the core product.

Strengthen perceived value

When people think about Duolingo, people think about the streak immediately. That has become a part of people's identities... It shows two things, right? It shows commitment, which is impressive. The other one is it shows progress.

Cem Kansu, VP of Product at Duolingo, on The Product Podcast

Even when real outcomes are strong, customers can churn if they don’t perceive that value. Strengthening perceived value isn’t about manipulation. Just like in Duolingo’s example, it’s about making sure the benefits are visible, understandable, and connected to what users care about.

  • Clarify value propositions in-product and in messaging. Show users what they gained (time saved, money saved, projects completed).

  • Use pricing and packaging that map to value metrics. Customers should feel that paying more means getting more.

  • Polish usability and performance. Small details like load speed and visual clarity often signal reliability and competence.

Practical example: a product management tool improved perceived value simply by adding a weekly email summarizing tasks completed and hours saved. Users already had those gains. They just weren’t aware of them.

Encourage healthy product habits

The long-term value of a product grows when it becomes embedded in daily or weekly routines. Habit formation ensures users keep experiencing value, which compounds over time.

Again, Cem Kansu from Duolingo, puts this in plain terms on The Product Podcast:

The core to success in self-taught learning is making it engaging. If we can't keep you on Duolingo, you're going to drop off. If you drop off, then you're definitely not learning anything.
  • Create gentle rituals (daily summaries, streak counters, recurring reminders) that reinforce use.

  • Align with existing user routines instead of trying to create entirely new ones.

  • Avoid dark patterns. The goal is to make valuable use effortless, not addictive.

Practical example: fitness apps increase long-term product value by nudging users with small reminders at the time they normally exercise, helping them form a repeatable habit without overwhelming them.

Align roadmaps with value creation

Ultimately, increasing the value of a product isn’t a side activity. It should be the backbone of product roadmap planning.

  • Use product scorecards (population, need, strategic fit, expected outcome, confidence) to prioritize initiatives.

  • Set explicit targets for value-related metrics, such as activation rate, time-to-value, or feature adoption.

  • Regularly revisit whether new features deliver measurable improvements to customer outcomes, not just more functionality.

By tying roadmap choices directly to value creation, product leaders ensure every release has a clear link to improving the product experience and the business’s outcomes.

Product Value Examples You Should Know About

Canva: reducing time-to-value with straight-line onboarding

One of the clearest ways to increase the value of a product is to shorten the path between signup and first success. Canva does this exceptionally well. 

When someone searches for “how to create a poster” and lands on Canva, they’re taken directly into the poster-creation flow. Within seconds, they’re designing instead of staring at a blank interface.

  • This “straight-line onboarding” eliminates unnecessary steps and gets users to the core benefit immediately.

  • The tactic dramatically reduces friction and improves activation rates.

  • The result is that Canva’s users perceive and realize product value almost instantly, which supports both retention and willingness to upgrade.

Asana: contextual onboarding that matches user intent

Another proven way to increase product value is to ensure onboarding feels personalized and effortless. Asana does this by asking just a handful of targeted questions, then guiding users directly to creating their first task. The setup is light, fast, and tailored.

  • New users don’t waste energy filling out complex forms. They see the product in action within a minute.

  • This kind of contextual product-led onboarding reduces cognitive load and highlights the product’s practical value early.

By aligning the product experience with what new users are trying to accomplish, Asana ensures that perceived and real value overlap from the very start.

Mixpanel: demo data to prove value before setup

Analytics products risk losing users if they start with an empty dashboard. Mixpanel solved this by preloading demo data into new accounts so users can immediately explore charts and reports without needing technical integration.

  • Instead of a blank state, users interact with working dashboards that showcase real product capabilities.

  • This tactic turns potential friction into a moment of delight—the product proves its value before the user invests effort.

  • Demo data significantly reduces abandonment and increases the likelihood of long-term adoption.

By showing product value upfront, Mixpanel avoids one of the most common onboarding pitfalls and reinforces both perceived and actual value.

Why Product Value Should Guide Every Decision

Product value is the foundation of product management. When teams define it clearly, measure it rigorously, and increase it deliberately, they transform features into outcomes and outcomes into growth.

The lesson from the examples is simple: value is not about how much you build, but how effectively you help customers succeed. 

For product managers, product leaders, and teams, the takeaway is clear: let product value guide your product prioritization, your product roadmaps, and your conversations with stakeholders. Measure it with discipline, improve it with precision, and communicate it so customers recognize what they gain.

In a world where only a fraction of new products succeed, those that thrive are the ones that make value unmistakable, for the customer and for the business. If you start there, you’ll not just ship products, you’ll build products that last.

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Updated: October 15, 2025

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