Workshop 5

Value Proposition & Business Model Design

~2 hrs 30 min · 6 phases · 3 sheets
Workshop 5 of 7

Value Proposition & Business Model Design

From "we have users" to "we have a strategy" · 3 sheets · 6 phases
What this workshop is about: Having users is not the same as having a business. Today you will articulate exactly why customers choose you, map your entire business model on a Lean Canvas, decide how to price, size your market opportunity, and position yourself against competitors. The session ends with a Strategy Gate — a structured check of whether you have a defensible, sizable, scalable business model or just a feature.
3
fillable sheets
6
phases
1
strategy verdict to defend

Workshop flow

1
Value Proposition — Why exactly do customers choose you?
Jobs-to-be-done, pains & gains, one-sentence stress test. Sheet 1.
20 min
2
Lean Canvas — Map the whole business on one page
9 blocks. Problem-solution fit. Mark your riskiest assumption. Sheet 2.
30 min
3
Pricing Strategy — What is your model and why?
5 models. Willingness-to-pay research. Anchoring. Sheet 3 Section A.
25 min
4
Market Sizing — Is the opportunity worth pursuing?
TAM / SAM / SOM framework. Bottom-up sizing. Revenue ceiling. Sheet 3 B.
20 min
5
Competitive Positioning — Where do you play and why do you win?
Unfair advantage. Moat types. Positioning map. Sheet 3 Section C.
20 min
6
Strategy Gate — Does the whole model hold together?
5-question readiness check. Riskiest assumption. Next experiment. Submit.
15 min

Your 3 sheets today

S1
Sheet 1 — Value Proposition Canvas
Phase 1 · Customer jobs, pains, gains → your value map
S2
Sheet 2 — Lean Canvas
Phase 2 · 9-block Lean Canvas with riskiest assumption flagged
S3
Sheet 3 — Strategy & Market Simulator
Phases 3–6 · Pricing, TAM/SAM/SOM, positioning, strategy gate
Tip Use the strategy simulator alongside this guide. The interactive tool lets you run TAM calculations, map your competitive position, and stress-test your business model assumptions in real time.
"A startup is not a small version of a large company. It is a temporary organisation in search of a scalable, repeatable business model."— Steve Blank
Phase 1 of 6 · 20 minutes

Value Proposition — Why Exactly Do Customers Choose You?

Sheet 1·Goal: a one-sentence VP that survives three stress tests
Goal: A value proposition is not a tagline. It is a precise claim about which customer, facing which problem, benefits from your product in which specific way. "We help freelancers stop losing €200/month in forgotten invoices" is a VP. "We make invoicing easy" is marketing copy. This phase forces you to work at the level of the customer's job — not your feature list.
20 minutes — if you can't say it in one sentence, you don't understand it yet.

The three lenses of a strong VP

J
Jobs to be Done

Customers don't buy products — they hire them to do a job. Jobs are functional (complete the task), social (be seen a certain way), and emotional (feel a certain way). Most startups only address functional jobs. The emotional job is where loyalty lives — and where competitors rarely look.

People buy drills because they want holes. They want holes because they want shelves. They want shelves because they want an organised home that impresses guests. What is your customer's real job?
P
Pains — focus on the screaming ones

Not all pains are equal. A "screaming pain" is bad enough that customers are already running workarounds — spreadsheets, sticky notes, hiring interns, doing it manually. Focus your VP on screaming pains. Mild inconveniences don't drive purchasing decisions.

Workarounds are a signal. If people have duct-taped a solution together, the problem is real and they'll pay to make it go away properly.
G
Gains — expected vs unexpected

Expected gains are the minimum: if your product doesn't deliver them, customers churn. Unexpected gains are surprises that create delight and word-of-mouth. The strongest VPs create at least one unexpected gain. Examples: speed (10x faster than expected), simplicity (no learning curve), or social proof (built-in community).

Dropbox's unexpected gain was that it just worked — no configuration. The expected gain was file sync. The unexpected gain was invisibility.

One-sentence format

We help [specific customer segment]
who struggle with [specific screaming pain]
by providing [your solution — one sentence]
so that they can [desired outcome / gain].

Three stress tests

Warning The feature trap. "We built a dashboard with real-time analytics" is a feature description, not a VP. Translate every feature into the job it completes or the pain it removes — then write your VP in those terms.
Action Fill Sheet 1. Run all three stress tests with a teammate playing the customer role. Don't proceed to Phase 2 until your VP passes the lean-forward test.
Phase 2 of 6 · 30 minutes

Lean Canvas — Your Whole Business on One Page

Sheet 2·Goal: map every assumption and find the riskiest one
Goal: The Lean Canvas (Ash Maurya's startup-adapted version of Osterwalder's BMC) replaces partnership-focused blocks with problem/solution thinking. It is designed for pre-product-market-fit ventures where the biggest risk is not execution — it's building the wrong thing. The canvas forces you to state your assumptions explicitly, then rank them by risk.
30 minutes — fill it fast (10 min), then spend 20 min identifying and debating your riskiest assumption.

The Lean Canvas — annotated

Block 1
Problem

The top 1–3 problems your customer segment has. Start here — not with your solution. If you can't name the problem without mentioning your product, you're solution-first.

  • Problem 1 (screaming pain)
  • Problem 2 (workaround pain)
  • Problem 3 (latent pain)
+ Existing alternatives customers use today
Block 3
Solution

Top 3 features that directly address the problems above. Not a full spec — the core that delivers the VP.

Match one feature per problem
Block 2
Unique Value Proposition

A single, clear, compelling message that states why you're different and worth attention. This is your Phase 1 VP sentence, compressed.

High-level concept: the one-line analogy investors use to describe you.

"Airbnb for storage" / "Stripe for Africa"

Block 9
Unfair Advantage

Something that cannot be easily copied or bought. Most early canvases leave this blank — that is honest. Fill it only when you have one.

  • Insider information
  • Expert endorsements
  • Dream team
  • Personal authority
  • Existing community
Block 4
Customer Segments

Who are you building this for? Be specific. "Everyone" is not a segment. Start with your Early Adopters — the customers who feel the problem most acutely and will tolerate an imperfect product.

Early adopter profile: who already has a workaround?
Block 8
Key Metrics

The handful of numbers that tell you whether the business is working. One activation metric. One retention metric. One revenue metric.

DAU, churn rate, MRR
Block 5
Channels

How you reach your customer segments. Distinguish between inbound (content, SEO, word-of-mouth) and outbound (ads, cold outreach, events). Which channels did your early adopters come through?

Block 7
Cost Structure

Customer acquisition costs · Distribution costs · Hosting/infrastructure · People · Tools & subscriptions. Which costs are fixed (exist regardless of users) and which are variable (scale with users)?

Block 6
Revenue Streams

How you make money. State the model (subscription, transaction, licensing) and the price. If you have multiple revenue streams, order them by size. Your revenue model must match your customer segment's purchasing behaviour.

Lean Canvas vs Business Model Canvas

Why Lean Canvas for startups?

The BMC was designed for established businesses that already know who their partners are and what their key activities are. The Lean Canvas removes four BMC blocks (Key Partners, Key Activities, Key Resources, Customer Relationships) and replaces them with startup-critical blocks: Problem, Solution, Key Metrics, and Unfair Advantage. This makes it more honest for pre-PMF ventures.

The riskiest assumption exercise

After filling all 9 blocks, identify the one assumption that, if wrong, makes the entire canvas collapse. Circle it in red. This is your next experiment. Design the cheapest possible test — could you validate or invalidate this assumption in one week for under €50? If not, break it into smaller testable pieces.

Insight Block 9 (Unfair Advantage) is the hardest — and the most important. Early-stage founders often write "our passion" or "our technology." These are not unfair advantages — they can be copied. Real unfair advantages include: proprietary data, regulatory approval, a unique distribution relationship, deep personal authority in the space, or a viral network effect built into the product itself.
Action Fill Sheet 2. Vote as a team: which block are you least confident in? That's your riskiest assumption. Write a one-sentence experiment design in the margin.
Phase 3 of 6 · 25 minutes

Pricing Strategy — What Is Your Model and Why?

Sheet 3 · Section A·Goal: a defensible pricing decision backed by WTP evidence
Goal: Pricing is not a number — it is a strategic signal. It communicates quality, shapes your target market, and determines your unit economics ceiling. Most founders underprice because they are afraid of rejection. Underpricing is not founder humility — it is founder innumeracy. A price that is too low forces you to acquire 10x more customers to reach the same revenue as a well-priced competitor.
25 minutes — don't pick a number randomly. Run the WTP interview process first.

The 5 pricing models

Best for SaaS
Subscription (recurring)

Fixed monthly/annual payment for continued access. Predictable revenue, high LTV potential. Requires ongoing value delivery — if customers don't feel it every month, they churn.

€19/month · €179/year
Marketplace / API
Usage-based

Pay per unit consumed. Low barrier to start; revenue scales with usage. Works when value is directly proportional to volume. Hard to forecast.

€0.05 per transaction
B2B / enterprise
Tiered / seat-based

Different price points for different team sizes or usage levels. Enables "land and expand" — start small, grow the contract. Most common path to €1M ARR in B2B.

€29 solo · €79 team · €249 pro
Consumer apps
Freemium

Core product free, premium features paid. Only works if the upgrade trigger is clear and immediate. Free users have real costs — support, infrastructure, brand dilution.

Free · €12/month Pro
Proven ROI businesses
Value-based

Price equals a fraction of the value delivered. Requires you to quantify ROI per customer. Highest margin model — but requires trust and proven outcomes before customers accept it.

15% of cost savings generated
Physical / software
One-time purchase

Single payment for perpetual access. Simple but caps LTV at purchase price. Requires constant new-customer acquisition to grow revenue. Works with strong brand or niche tools.

€79 lifetime

Willingness to Pay (WTP) — 4 questions

Anchoring — always lead high

Show your most expensive plan first. The premium price anchors expectations so the mid-tier feels like a bargain. Leading with the cheapest option anchors low and makes the whole product feel cheap.

The 10x rule

Customers buy when they perceive at least 10x the value of what they pay. At €19/month, the customer should feel they get at least €190/month of value. If you can't articulate that 10x, rethink the model or the price.

Warning Underpricing kills startups slowly. At €5/month you need 2,000 subscribers for €10k MRR. At €50/month you need 200. The 10x more customers also means 10x more support tickets, infrastructure costs, and onboarding complexity — before you've proven the model works at scale.
Action Run the 4 WTP questions with 3–5 real potential customers (phone call, not survey). Pick your launch price at the upper edge of the acceptable range (Q2–Q3). Fill Section A of Sheet 3.
Phase 4 of 6 · 20 minutes

Market Sizing — Is the Opportunity Worth Pursuing?

Sheet 3 · Section B·Goal: a credible TAM/SAM/SOM calculation using bottom-up logic
Goal: Market sizing answers the strategic question: even if everything goes right, is there enough opportunity here to build a significant business? A business in a €1M market cannot become a €10M business. A business in a €10B market with 0.1% penetration is a €10M business. This phase teaches you to size markets honestly — not with wishful top-down projections, but with bottom-up customer arithmetic.
20 minutes — use the bottom-up method. Top-down numbers impress no one.

The three circles

TAM
Total Addressable Market

The total revenue opportunity if you captured 100% of the market. Used to establish the ceiling of the opportunity. Calculated by: total potential customers × average revenue per customer per year. Never cite a research report's TAM without understanding how it was calculated.

Global invoicing software TAM: 500M freelancers × €120/year = €60B. This is a ceiling, not a target.
SAM
Serviceable Addressable Market

The portion of TAM you can actually reach with your current product, pricing, and geography. Apply filters: your geographic focus, language, platform requirements, your sales model's realistic reach. SAM = TAM × realistic segment filters.

Baltic + Nordics freelancers using digital tools: 2M × €120/year = €240M SAM. This is what you're competing for.
SOM
Serviceable Obtainable Market

The share of SAM you can realistically capture in 3 years given your resources, competition, and go-to-market. For early-stage startups, 1–5% of SAM is realistic. SOM is your actual revenue target — and the number that determines whether this venture is worth building.

3% of €240M SAM over 3 years = €7.2M ARR target. Is that the business you want to build?

Bottom-up market size calculator

TAM / SAM / SOM Calculator

Build market size from customer counts — not from research reports.
e.g. freelancers in your region
monthly price × 12
geography, language, tech access
realistic market share
TAM — Total Addressable Market
SAM — Serviceable Addressable Market
SOM — Your 3-year revenue target
Calculating...

Market size red flags

SOM below €1M ARR

At 3-year SOM under €1M, this is a lifestyle business, not a venture. Reconsider your segment, geography, or pricing. Either expand the market definition or raise the price.

Top-down sizing only

"The global market is €50B and we need only 1%" is a red flag. 1% of a global market requires massive distribution. Always triangulate with bottom-up customer counts.

Investor-grade SOM

A €5–50M ARR 3-year SOM from a credible bottom-up calculation is compelling for seed and Series A investors. It shows the opportunity is real without being delusional.

Niche first, then expand

Start with a SOM that is winnable — a small, specific segment you can dominate. Then expand from a position of strength. Trying to address a large market from day one dilutes focus and spreads resources.

Action Fill Section B of Sheet 3 with your TAM/SAM/SOM numbers. Show the arithmetic — how did you arrive at the customer count and SAM filter? Unsupported numbers will be challenged in the strategy gate.
Phase 5 of 6 · 20 minutes

Competitive Positioning — Where Do You Play and Why Do You Win?

Sheet 3 · Section C·Goal: a defensible position and a credible moat
Goal: Every market has incumbents. Your goal is not to compete on every dimension — it is to find the 2 dimensions where you can win, and own them completely. This phase maps your competitive landscape, identifies white space, and forces you to articulate what makes your position genuinely defensible over time. A position without a moat is temporary.
20 minutes — map competitors honestly. The worst analysis assumes you have none.

The four types of competitive moat

Net
Network Effects

The product becomes more valuable as more people use it. Direct network effects: more users directly benefit existing users (WhatsApp). Indirect: more sellers attract more buyers (Airbnb). The most durable moat — but requires critical mass to activate.

Early-stage: focus on achieving critical mass in a single geographic cluster or user segment before expanding.
Lock
Switching Costs

The cost — in time, money, data migration, retraining — of switching to a competitor. Enterprise software has high switching costs (Salesforce). Consumer apps have low ones. Increase switching costs by embedding deeply into customer workflows and becoming the system of record for their data.

The more of a customer's history lives in your product, the harder it is to leave.
Data
Proprietary Data / IP

Data advantages compound. If your product generates unique data as users interact with it, that data trains better models or surfaces better insights — which attracts more users — which generates more data. Also includes patents, trade secrets, and regulatory licences.

Early: even a small proprietary dataset gives you a head start that competitors can't replicate by building the same product.
Brand
Brand & Community

Brand trust is a moat when customers pay a premium solely because of who you are — not just what you do. Community is a moat when users derive value from each other (forums, peer learning, accountability groups). Both take years to build but are extremely hard to copy.

Community is the hardest moat to replicate — it requires genuine cultural embedding, not just a Slack group.

Moat strength self-assessment

Moat Scorer

Rate your current position on each moat dimension (1–3 stars). Be honest — what you have today, not what you hope to build.
Total moat score 0 / 15
Rate each dimension above.

Positioning statement

A positioning statement clarifies who you serve, what category you're in, and what makes you different. Fill in the blanks:

For [customer segment]
who want to [job to be done],
[your product name] is a [category]
that [unique differentiator].
Unlike [primary competitor],
our product [key difference — the one thing you do better].
Warning "We have no competitors." This statement signals to investors that you either haven't researched the market or the problem doesn't exist yet. Every product competes with the status quo — including doing nothing, using a spreadsheet, or hiring a person. Name those alternatives explicitly.
Action Fill Section C of Sheet 3: write your positioning statement, list your top 3 competitors, and identify which moat type you are building. Use the strategy simulator's Positioning Map to place yourself visually.
Phase 6 of 6 · 15 minutes

Strategy Gate — Does the Whole Model Hold Together?

Sheet 3 · Submit·Goal: a single defensible verdict on your business model
Goal: A strategy gate is not a grading exercise — it is a structured forcing function for honest self-assessment. Each question below targets a common failure mode in early-stage business models. A model that can't answer all five questions clearly is not ready to scale. The output of this phase is a written strategic verdict and a next-experiment commitment.
15 minutes — write honest answers. Vague answers are a red flag, not a green one.

The five strategy gate questions

Insight The goal is not to pass all five questions today. The goal is to know which question you fail and commit to fixing it in the next sprint. A team that fails question 3 (market size) and responds "we'll fix it by expanding to Germany" has a plan. A team that says "we're sure it's big" has a problem.

Riskiest assumption commitment

Name your single riskiest assumption

From your Lean Canvas and the strategy gate, what is the one assumption that, if wrong, changes everything? Write it here, then design the minimum viable experiment to test it.

Our riskiest assumption is:
We will test it this week by:
We'll know the assumption is validated when:
Action Fill Section D of Sheet 3 with your strategy gate answers and riskiest assumption experiment. This is your submission for Workshop 5. The quality of the experiment design — not the score on the gate — is what gets assessed.
"The goal of a startup is to figure out the right thing to build — the thing customers want and will pay for — as quickly as possible."— Eric Ries, The Lean Startup