The One Ratio That Changed How I Think About Product Value

I've been obsessing over this idea lately, and it's completely changed how I think about building products. Most people look at a product and immediately think about price. Smart buyers think about ROI. But there's something even simpler that cuts through all the noise - and honestly, I wish I'd figured this out years ago.

I call it VDCR: Value Delivered to Cost Ratio.

The math is embarrassingly simple: Take the monetary value you get back, divide it by what you paid. That's it. But the implications? That's where it gets interesting.

Why This Clicked For Me

A few days back, I was looking at our clinic reminder system, Medinudge. Costs ₹199 a month. Sounds reasonable, but then I started thinking differently.

If this thing helps a clinic recover even one missed appointment worth ₹3,000, suddenly you're looking at a 15x return. For every rupee spent, you get 15 back. That's when it hit me - we weren't selling a ₹199 software. We were selling a ₹3,000 recovery tool that happens to cost ₹199.

Same thing happened with Coralboard, our board governance tool. ₹499 monthly subscription, but it saves startups ₹5,000+ in CS back and forths, admin time, and penalty avoidance. That's a 10x VDCR right there.

The Thing About Ratios

I've always been drawn to ratios because they make complex decisions simple. Over the years, we've used several:

LTV/CAC tells you if your business model actually works long-term. If you're spending more to acquire customers than they're worth, you're in trouble.

Payback Period shows how quickly you recover your customer acquisition costs. The faster, the better your cash flow.

Time-to-Value measures how long before customers actually feel the ROI. Too long, and they'll churn before seeing benefits.

Retention ROI Ratio compares the value of keeping existing customers versus acquiring new ones. Usually, retention wins by a mile.

But VDCR flips the lens completely. Instead of looking inward at your business metrics, you're looking outward at customer value.

The Disruption Connection

Here's something I've been thinking about (and scribbling in my notebook): disruption often comes down to resistance to purchase. When someone is willing to pay for your solution, there's usually multiple instances of the same problem existing in the market with different price ranges.

But if your disruption is positive and leads to a high VDCR ratio, then it's actually good disruption. The challenge becomes: how do you get that ratio high enough that the decision becomes obvious?

I've been playing with this formula: a × X = Y × VDCR, where x is a process and a is the disruption variable and Y is the change multiple. The higher your VDCR, the easier it becomes to justify the purchase.

How This Changes Product Thinking

When we're building something new, I don't start with "what features should we add?" anymore.

I start with: "How much value can we deliver? What will it cost the customer? What's the ratio?"

If I can't get to at least a 5x VDCR, I question whether we should build it at all. If we're hitting 10x-20x (like we are with Medinudge and Coralboard), then we know we're onto something.

The Storytelling Power

Here's the real magic of VDCR - it's not just a metric, it's a story. Instead of saying "our software costs ₹499 per month," you say "for every ₹1 you spend with us, you get ₹10 back."

Which one sounds more compelling?

The ratio becomes your pitch. It becomes your pricing confidence. It becomes your customer's internal justification for buying.

What I'm Learning

The more I work with VDCR, the more I realize it's not just about the math. It's about shifting from feature-thinking to value-thinking. From cost-center thinking to profit-center thinking.

When you can clearly articulate the value you deliver relative to your cost, everything else becomes easier. Pricing, positioning, customer conversations, even internal prioritization.

The products in our portfolio that score 10x-20x VDCRs? They sell themselves. The ones below 5x? We're still figuring out the value story.