Need Curve is a powerful analytical tool in the Jobs to be Done (JTBD) framework that visualizes and quantifies market opportunities based on customers' willingness to pay to get their jobs done. The Need Curve enables portfolio companies to more accurately size market opportunities, identify high-value customer segments, and develop pricing strategies that maximize growth and equity value.
A Need Curve is a graphical representation that plots the number of customers in a market against their willingness to pay to get a job done. The curve resembles a traditional economic demand curve but differs in a fundamental way: instead of plotting price against quantity demanded for a specific product, it plots willingness to pay against the number of customers for getting a job done, independent of any specific product or solution.
The Need Curve serves several critical purposes:
While the Need Curve bears some resemblance to a traditional economic demand curve, there are important distinctions:
This distinction is crucial because traditional market sizing approaches based on product prices often lead to serious strategic errors. For example, sizing the "MP3 player market" based on iPod prices in 2006 would have entirely missed the much larger opportunity for streaming services to help customers create moods with music.
Creating an accurate Need Curve requires rigorous research and analysis. The thrv methodology includes several steps for constructing Need Curves for portfolio companies:
Before constructing a Need Curve, researchers must clearly define the job customers are trying to get done. This job definition establishes the boundaries of the market being analyzed.
For example, the job might be "get to destinations on time," "acquire new customers," or "obtain a blood sample."
Researchers conduct quantitative research to determine customers' willingness to pay to get their job done better. This typically involves:
Researchers analyze patterns in willingness to pay and job execution struggles to identify meaningful customer segments. These segments often exhibit distinct patterns in:
Based on research data, the Need Curve is constructed by:
The area under this curve represents the total economic opportunity in the market—what thrv calls the "Securable Market."
The area under the Need Curve is referred to as the Securable Market because it represents the total revenue potential a portfolio company can secure by helping customers get their job done better at a price they are willing to pay.
The Securable Market is calculated by integrating the willingness to pay across all customers in the market:
Securable Market = ∫(Number of Customers × Willingness to Pay)
This calculation provides a more accurate and stable measure of market opportunity than traditional approaches based on product prices because:
Understanding the Securable Market helps portfolio companies make more informed decisions about which markets to enter, which segments to target, and how to position their offerings.
The shape of the Need Curve reveals important insights about market structure and opportunities:
A steep Need Curve indicates:
A flat Need Curve indicates:
An S-shaped Need Curve suggests:
A discontinuous Need Curve with clear "steps" indicates:
These patterns guide portfolio companies in developing targeted growth strategies that address specific segments of the Need Curve.
One of the most valuable applications of the Need Curve is in market segmentation:
Traditional segmentation approaches often rely on demographic, firmographic, or psychographic characteristics that may have little relationship to purchasing behavior.
In contrast, the Need Curve enables segmentation based on two critical factors:
By combining these factors, portfolio companies can identify high-value segments that are both willing to pay for better solutions and currently struggling with existing options.
Of particular interest are segments with both:
These segments represent premium opportunity segments—groups of customers who are both willing to pay more for better solutions and currently underserved by existing offerings.
For example, in the job of "getting to destinations on time," a premium opportunity segment might be business travelers who make frequent, unfamiliar stops. They have high willingness to pay because their time is valuable and getting to meetings on time directly impacts their professional success. They also struggle significantly with current navigation solutions, which don't effectively help them plan optimal routes with multiple stops.
By identifying these premium opportunity segments, portfolio companies can develop targeted solutions that command higher prices while addressing specific unmet needs.
The Need Curve provides a powerful foundation for developing pricing strategies:
By analyzing the relationship between price points and addressable market size, companies can identify optimal pricing that balances revenue per customer with total market reach.
For example, if the Need Curve shows a significant "knee" at a particular price point (where the slope changes dramatically), this often indicates a natural price point that maximizes total revenue.
The Need Curve reveals opportunities for price discrimination strategies, where companies offer different pricing tiers to capture more of the area under the curve.
For instance, companies might offer:
The Need Curve shifts pricing discussions from cost-plus or competitive reference approaches to value-based pricing, where prices reflect what different segments are willing to pay based on the value they receive.
This typically leads to higher margins and more sustainable pricing power.
For segments with lower willingness to pay but significant market size, the Need Curve helps companies develop targeted cost-reduction strategies that can profitably address these segments.
By understanding exactly how much these segments are willing to pay, companies can design streamlined offerings that meet essential needs at acceptable price points.
The Need Curve fundamentally influences how portfolio companies develop their product strategies:
The Need Curve helps companies determine which segments to target based on size, willingness to pay, current satisfaction levels, and competitive positioning.
This ensures product development resources focus on the most valuable market opportunities.
Understanding which segments the company is targeting on the Need Curve helps prioritize features that address the specific needs of those segments.
For premium segments, this typically means focusing on features that address high-value unmet needs, even if these features are costly to develop or implement.
The Need Curve guides decisions about product line breadth and tiering, helping companies determine whether to offer:
For platform businesses, the Need Curve helps identify which side of the platform should pay versus which side might be subsidized based on willingness to pay and network effects.
The Need Curve reveals underserved segments that competitors may be overlooking, helping companies identify distinctive market positions even in crowded markets.
In thrv's proprietary Jobs to be Done methodology, the Need Curve serves as a fundamental tool for creating growth strategies for portfolio companies:
The thrv platform includes tools for constructing and analyzing Need Curves to assess the total economic opportunity in different markets.
The methodology uses Need Curves combined with need satisfaction data to identify the most attractive customer segments for portfolio companies to target.
Based on Need Curve analysis, thrv helps portfolio companies develop targeted growth strategies that focus on specific high-value segments of the curve.
The methodology includes frameworks for using Need Curve insights to develop value-based pricing strategies that maximize revenue and profit.
thrv helps portfolio companies create and prioritize product roadmaps that address the specific needs of their target segments on the Need Curve.
This comprehensive approach ensures that all aspects of a portfolio company's strategy align around targeting the most valuable segments of the Need Curve.
The Need Curve has been successfully applied across various industries to identify high-value market opportunities:
In the job of "getting to destinations on time," a Need Curve analysis revealed a significant premium segment of business travelers willing to pay substantially more than average consumers for better solutions.
This segment's high willingness to pay was driven by the direct impact of timely arrival on professional success and the high opportunity cost of their time. Their struggles with planning optimal routes with multiple stops represented a specific unmet need that competitors like Apple and Google Maps did not adequately address.
Understanding this premium segment enabled the development of specialized navigation solutions that commanded premium prices while addressing specific unmet needs.
In the job of "obtaining a blood sample," a Need Curve analysis identified distinct segments among healthcare providers based on willingness to pay for improvements in this job.
Emergency departments and critical care units showed extremely high willingness to pay for solutions that could provide faster results with smaller sample volumes. In contrast, routine preventive care settings had much lower willingness to pay for these improvements.
This segmentation guided the development of tiered diagnostic solutions, with premium offerings targeting high-acuity settings and value offerings addressing routine care environments.
In the job of "acquiring new customers," a Need Curve analysis revealed that small businesses and large enterprises had significantly different willingness to pay for improvements in this job.
While large enterprises were willing to pay substantially for comprehensive solutions that addressed every aspect of the job, small businesses showed much lower willingness to pay but represented a much larger total market.
This insight guided the development of tiered CRM offerings, with premium enterprise solutions commanding high prices from a smaller customer base, while streamlined small business offerings addressed a larger market at lower price points.
For portfolio companies, the Need Curve delivers several strategic benefits:
By focusing on customers' willingness to pay to get jobs done rather than current product prices, the Need Curve provides a more accurate assessment of market opportunities.
This helps companies avoid both overestimating opportunities in dying product categories and underestimating opportunities in emerging solution areas.
Understanding the Securable Market helps companies make more informed decisions about which markets to enter, which segments to target, and how much to invest in product development.
This reduces the risk of either under-investing in attractive opportunities or over-investing in limited markets.
By identifying specific segments with both high willingness to pay and significant unmet needs, the Need Curve helps companies develop targeted growth strategies with higher probabilities of success.
This is particularly valuable for portfolio companies seeking to accelerate growth in competitive markets.
The Need Curve shifts pricing from cost-plus or competitive reference approaches to value-based strategies that capture more of the economic value created.
This typically leads to higher margins and more sustainable pricing power.
By revealing underserved segments that competitors may be overlooking, the Need Curve helps companies identify distinctive market positions even in crowded markets.
This is especially important for portfolio companies competing against larger incumbents.
The Need Curve represents a fundamental shift in how companies assess market opportunities and develop growth strategies. By focusing on customers' willingness to pay to get their jobs done rather than current product prices, the Need Curve provides a more accurate and stable foundation for strategic decision-making.
The thrv methodology provides portfolio companies with sophisticated tools for constructing and analyzing Need Curves in their markets. This Need Curve-based approach to market assessment leads to more accurate sizing, better segment targeting, optimized pricing, and ultimately accelerated growth and enhanced equity value.
By understanding not just what customers currently pay for existing solutions but what they would be willing to pay for solutions that help them get their jobs done better, portfolio companies can identify high-value opportunities even in mature markets and develop strategies that create sustainable competitive advantage.