Pricing cases without competition

Hi! With no direct competition, value-based pricing is the standard approach. The two anchors you mentioned (cost and value to customer) are the right ones: cost is the floor below which you destroy value, value to customer is the ceiling above which they will not buy. The real question is where to price between them.

How to approach it:

1. Quantify the floor. Cost to produce plus the minimum margin the client needs.
2. Quantify the ceiling. Value created for the customer in their economics, measured against the next best alternative they have today. Even with no direct competitor, the customer is doing something now (existing fertilization practice, manual soil testing, older variable-rate systems) and that sets the reference point. For Green Nutrient, the ceiling is the fertilizer saved by avoiding over-application, plus any yield uplift from avoiding under-application, minus the cost of the current alternative.
3. Pick a point in between based on strategic intent. Two ends of the spectrum: skim (price close to the ceiling to maximize margin per unit) or penetrate (price close to the floor to maximize adoption)
4. If you want to push further, think about segmentation. Different customer groups have different willingness to pay and different use cases. You can launch tiered versions of the product, or price by usage, to capture value from each segment instead of leaving money on the table with a single price point.

Hope it helps. Feel free to drop me a message if anything is unclear and good luck with the interview!

Hi there,

One thing that helped many of my coachees is to stop thinking about pricing cases as "finding the perfect number." In most interviews, there is no single correct price. What interviewers want to see is a logical process that narrows down the range and justifies the recommendation.

For a product with no competition, I would use the following approach:

• Clarify the objective. Is the client trying to maximize profit, gain market share, recover R&D costs quickly, or establish itself as the market standard? The same product could have very different prices depending on the objective.
• Estimate demand sensitivity. Even without competitors, customers can still choose to do nothing or use an alternative solution. Ask yourself: how much will demand change if the price doubles or is cut in half?
• Consider the pricing mechanism. Does it make sense to charge per unit, as a subscription, per transaction, or based on performance? Sometimes the pricing model creates more value than changing the price itself.
• Stress-test the recommendation. Once you've selected a price, explain how you would validate it. For example, pilot the product with a few customer segments, gather willingness-to-pay feedback, and adjust before a full rollout.

So rather than trying to calculate one "perfect" price, show that you can recommend a starting point and explain how you would refine it with market evidence. That's often what distinguishes stronger candidates in pricing cases.

If pricing cases are your main weakness before McKinsey, I'd spend a session focused solely on them. They're very pattern-based, and once you understand the underlying logic, they become much more intuitive.

Hi there,

First of all, congratulations on the invitation from McKinsey!

I would be happy to share my thoughts on your question:

• First of all, it seems that you - like other coaches - are overlooking a fundamental mistake: McKinsey won’t ask you for an approach. The misconception is that structuring at McKinsey works exactly the same way as at any other consulting firm, which, unfortunately, isn’t true.
• Moreover, I would strongly advise you to consider working with an experienced coach like me on your structuring skills. I developed the "Case Structuring Program" to help exactly such candidates like you who struggle with case study structures.

If you would like a more detailed discussion on how to best prepare for your upcoming McKinsey interviews, please don't hesitate to contact me directly.

Best,

Hagen

For a monopoly product like this fertilizer technology, standard framework buckets feel weird because you only need two numbers: your cost floor and the customer's value ceiling.

What most people get wrong is trying to guess a random percentage between those two numbers. Interviewers are watching how you think, not checking if you reach a pre-determined right answer.

What actually matters is quantifying the value created. For this case, the customer's value ceiling is determined by adding up the exact dollar amount the farmer saves on wasted fertilizer plus the extra revenue they get from optimized crop yields.

Once you establish that total economic value per acre, you set the price by splitting the value. A typical rule of thumb is charging the customer one-third to one-half of the value they save, ensuring they still keep a massive incentive to adopt your new technology.

Feel free to reach out if you want to walk through the math for this value-split approach.

For a simple McKinsey pricing case with no competition, the cleanest structure is to anchor everything on willingness to pay and then sanity‑check with costs. You start by defining the customer segments and what problem the new technology solves for each, then quantify the economic value it creates for them, then choose a price point within that value range based on adoption goals. Costs only matter as a floor to ensure you are not pricing below viability. That’s it. In a no‑competition market, value is the only real driver, and the “perfect price” is simply the point where willingness to pay and your strategic goal intersect. If you want, I can walk you through a short value‑based pricing example.

Best, Alessa