# Value Scenario Formula (value-formula.md)

**Formula version:** 2.0

Documents the deterministic calculation that the `reversa-pricing-estimate` agent applies for the Value scenario. Formula v2 replaces the old fixed multiple of 6 to 12 months with a percentage capture of the declared annual economic value.

## Source and rationale

Value-based pricing uses the perceived or economic value to the client as the price basis, not just internal cost or competitor pricing.

References:

- Hinterhuber, A. (2008), *Customer value-based pricing strategies: why companies resist*, Journal of Business Strategy, 29(4), DOI 10.1108/02756660810887079
- Nagle, Hogan, and Zale, *The Strategy and Tactics of Pricing*, 5th ed., Routledge, 2016, especially Economic Value to the Customer

The 10% to 30% range is a Reversa commercial heuristic for B2B/freelance/agency. It must be described as a capture of a portion of the annual value, not as a universal academic law.

## Step 1: input validation

```
if monthly_return_declared == 0 AND cost_of_not_doing == 0:
  available = false
  explanation = "Value scenario cannot be calculated: client did not declare measurable return."
```

`users_impacted` is commercial context. It appears in estimate.md, but does not enter the numerical calculation in v2.

## Step 2: annual economic value

```
annual_value =
  max(monthly_return_declared * 12, cost_of_not_doing)
```

The client may declare:

- recurring monthly return
- annual cost of not doing
- both

When both exist, the formula uses the larger defensible economic value.

## Step 3: value capture

```
value_capture_min = 0.10
value_capture_recommended = 0.20
value_capture_max = 0.30

price_minimum = round_currency(annual_value * value_capture_min)
price_recommended = round_currency(annual_value * value_capture_recommended)
price_maximum = round_currency(annual_value * value_capture_max)
```

## Step 4: explanatory payback

If `monthly_return_declared > 0`, calculate payback as a secondary explanation:

```
payback_months_min = price_minimum / monthly_return_declared
payback_months_max = price_maximum / monthly_return_declared
```

If `monthly_return_declared == 0`, store `payback_months_min = null` and `payback_months_max = null`.

Payback does not define the price. It only helps the user explain the proposal.

## Examples

### Example 1: clear monthly return

```
monthly_return_declared = 2000 BRL
cost_of_not_doing = 5000 BRL

annual_value = max(2000 * 12, 5000) = 24000
price_minimum = 24000 * 0.10 = 2400
price_recommended = 24000 * 0.20 = 4800
price_maximum = 24000 * 0.30 = 7200
payback_months_min = 1.2
payback_months_max = 3.6
```

### Example 2: annual loss prevention

```
monthly_return_declared = 0
cost_of_not_doing = 60000 BRL

annual_value = max(0, 60000) = 60000
price_minimum = 6000
price_recommended = 12000
price_maximum = 18000
payback_months_min = null
payback_months_max = null
```

### Example 3: no measurable data

```
monthly_return_declared = 0
cost_of_not_doing = 0

available = false
```

## Conversion to billing currency

Identical to Effort. When `profile.billing_currency` is set:

```
price_minimum_billing = round_currency(price_minimum / exchange_rate_to_local)
price_recommended_billing = round_currency(price_recommended / exchange_rate_to_local)
price_maximum_billing = round_currency(price_maximum / exchange_rate_to_local)
```

## Limits and assumptions

1. The return declared by the client is not validated by the agent
2. The 10% to 30% capture range is a documented heuristic
3. `users_impacted` does not enter the numerical calculation in v2
4. Extreme values are not truncated
5. The explanation may mention payback months, but must not say the price is "6 to 12 months"