Handling Risk with Outcomes-Based Pricing

Joe Pine is an internationally recognized author, speaker, and advisor, best known for The Experience Economy and his latest work, The Transformation Economy. In this episode, Joe explains why the market is finally ready—25 years later—for the shift to the transformation economy. He walks through the evolution of economic value, from commodities to goods, services, experiences, and now transformations, and makes the case that businesses must stop charging for inputs and start charging for outcomes. Joe introduces the four spheres of transformation—Health & Wellbeing, Wealth & Prosperity, Knowledge & Wisdom, and Purpose & Meaning—and argues that the true role of business is human flourishing: helping people become who they're meant to be. Profit isn't the goal; it's the scorecard. We also explore "encapsulation"—preparation, reflection, and integration—and why it's the key to turning experiences into lasting change. Joe breaks down why outcomes-based pricing is both the hardest shift and the biggest opportunity for transformation-driven companies. In this conversation, you'll learn how to spot transformation opportunities in your business, move beyond time-based pricing, and align what you charge with what customers actually value. Find episode 499 on The Leadership Podcast, YouTube, or wherever you get your podcasts! Watch this Episode on YouTube | Joe Pine on You're Charging for the Wrong Thing with Joe Pine https://bit.ly/TLP-499 Key Takeaways [04:04] Joe explains why the world is finally ready for the transformation economy after 25 years of people asking when he'd write this book. [09:11] The four spheres of transformation: Health & Wellbeing, Wealth & Prosperity, Knowledge & Wisdom, and Purpose & Meaning—and why almost every business can find themselves in at least one. [12:59] The difference between fitness centers (charging for time as an experience) versus personal trainers (instilling discipline for transformation). [17:42] Why companies must eventually align what they charge for with what customers value—and how this drives the shift to outcomes-based pricing. [22:09] Joe introduces "invitational transformations"—experiences that invite people to transform their identity (like the Guinness Storehouse or Abraham Lincoln Presidential Library). [26:38] Human flourishing defined: the extent to which people are who they're meant to be. This is the raison d'être of business. [34:09] The concept of encapsulation: Preparation (before the experience), Reflection (after), and Integration (ongoing)—the framework that turns experiences into transformations. [35:59] How Joe wrote the book on Substack, getting real-time feedback from subscribers that fundamentally changed key frameworks in the book. [44:18] Joe's vision for transformation businesses: charge for demonstrated outcomes, foster human flourishing, and recognize that profits measure how well you help people flourish—not the end goal itself. [46:46] And remember..."The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic. Transformation begins with a change in mindset." — Peter Drucker Quotable Quotes "You are what you charge for. If you charge for undifferentiated stuff, you're in the commodities business. If you charge for demonstrated outcomes that your customers achieve, you're in the transformation business." "Eventually you have to align what you charge for with what your customers value. Let me say it again: Eventually you have to align what you charge for with what your customers value." "Fostering human flourishing is the raison d'être of business, period. That's why business exists—to help people flourish." "Human flourishing is the extent to which people are who they're meant to be." "The irony is of course that you may be offering a transformation guarantee, but that's exactly what you can't actually do. You can't guarantee a transformation. However, the best way to get it to happen is to offer a guarantee." "Profits are never the end. They're always the measurement by which you achieve the ends of human flourishing." These are the books mentioned in this episode Resources Mentioned The Leadership Podcast | theleadershippodcast.com Sponsored by | www.darley.com Rafti Advisors. LLC | www.raftiadvisors.com Self-Reliant Leadership. LLC | selfreliantleadership.com Joe Pine Website | www.strategichorizons.com Joe Pine X | @joepine Joe Pine LinkedIn | www.linkedin.com/in/joepine TLP004: Joe Pine - Visionary Leadership Instilling Purpose