Deal design lens
Value Capture
Value Creation asks how much value the exchange can create. Value Capture asks what you and the other side actually retain once economics, rights, obligations, and concessions are accounted for.
This is not a theory of how surplus ought to be divided. It is a working question for you: what must you preserve for the deal to stay worth doing, what must they receive to accept, and can structure do the work instead of another giveaway?
What the lens asks.
- What value does the transaction create for you, and how much of it do you actually retain?
- What does the other side receive or retain after everything they give up?
- Which requested concessions are genuine acceptance requirements, and which are simply the variable currently being negotiated?
- Are you solving an acceptance problem by transferring value when a structural change could solve it more cheaply?
- What are you giving that matters little to them, or withholding that would matter greatly to them?
- What can they give that matters greatly to you but costs them relatively little?
Capture is much broader than price.
Price is the most visible transfer, not the only one. Rights, obligations, flexibility, access, and priority all move value between the parties. Several of these also show up under Burden, Risk, Commitment, or Timing — the filing matters less than seeing the effective exchange as a whole.
Nominal price is not effective economics.
A $1M agreement with free implementation, broad termination rights, uncapped support, aggressive service credits, a low renewal cap, and expensive custom work can leave you with far less than a smaller headline number carrying clean obligations.
It runs the other way too. Non-cash terms — retained rights, reference permission, priority capacity, data access, an option on expansion — can be economically important even when the invoice is unchanged. The contract value describes what gets billed, not what either side keeps.
Concession or deal move?
Concession
Gives the other side more of something at your expense, and generally leaves the underlying problem where it was. That can still be rational: when the value really is below the price, a discount may be precisely the right answer.
Deal move
Changes the configuration so the constraint itself is addressed — sometimes creating value, sometimes trading variables the two sides price differently. See Deal Moves for the mechanics.
Principle
Do not confuse the term they are negotiating with the problem you need to solve.
The claim is not that conceding is wrong. It is that you should diagnose before you concede, because the cheapest fix is often not the variable under discussion.
Give and get.
When you change something that costs you, ask whether the structure can also change in a way that returns something you value. This is not a rule that every concession must be mechanically reciprocated. It is a discipline that stops the conversation collapsing onto one variable and surfaces the differences worth trading.
Lower price
Longer commitment
Payment flexibility
Firmer volume
Exclusivity
Minimum commitments
Broader rights or fields
Higher economics or participation
Implementation support
Standardised scope
Termination flexibility
Higher price or a cancellation fee
Different currencies.
Good deal design rarely trades only in money. Timing, rights, commitment, scope, risk, control, upside, certainty, effort, and optionality are all currencies, and the two sides price them differently. A dollar of nominal price is not a dollar of experienced value on either side of the table.
The search is for two things at once: what you can give that costs you less than it is worth to them, and what they can provide cheaply that is valuable to you. This connects directly to Value Creation, because some of these trades enlarge what the deal produces rather than moving it around. Not every such trade is a Pareto improvement, and it is worth being honest about which is which.
Value leakage.
Leakage is value surrendered unintentionally, because terms are considered one at a time rather than as a system. Each item is approved by a different person, in a different conversation, and none looks material on its own.
- A discount approved to close a budget conversation.
- Custom scope added to satisfy one stakeholder's requirement.
- Accelerated support levels granted to reassure a sceptical team.
- Broad termination rights conceded late, after implementation cost is already committed.
- A renewal cap agreed in procurement, long after the pricing discussion appeared settled.
Individually defensible; cumulatively, the geometry can destroy the economics of the transaction. The discipline is to read the current offer as one structure and price it as one structure.
Acceptance boundaries, and when to walk.
You need to know what must be preserved for the transaction to remain worth doing — not as a precise number, but clearly enough to recognise when a proposed structure has crossed it. The other side has a boundary of their own, which you can infer but never observe exactly.
Deal design searches for configurations that sit inside both. Sometimes none exists. When that is the case, no amount of structuring rescues it, and declining is the correct outcome rather than a failure of technique.
Example · Software
They ask for 15–20% off.
The request names price. The problem underneath it might be one of three quite different things, and each implies a different response.
The value really is below the price
If the improvement your offer produces is genuinely worth less to them than what you are charging, no clever structure fixes that. A discount — or a smaller offer — may be exactly the right move.
First-year budget or cash timing
The total is acceptable but the first-year figure is not. Ramped or deferred payment, phased scope, or a later start can solve it without permanently repricing the relationship.
Uncertainty about whether it will work
The discount is really a request to pay less for something unproven. A paid pilot, milestone-linked payments, or a shorter initial term with better later economics addresses the actual doubt.
What a give/get version looks like
Ramped pricing for a three-year term
Relieves the first-year constraint and can raise total value retained, at the cost of your flexibility to reprice and theirs to leave.
Discount for committed volume or a reference
The price falls, but you receive certainty or a commercially useful right in return — provided the reference is genuinely deliverable.
Phased scope at the requested first-year number
You deliver less rather than charge less, protecting the unit economics but shifting some of the promised value later, which affects Credibility and Timing.
Each move has second-order effects: a longer term changes Commitment, a phased scope changes Timing and the burden of proof behind your Promise, and a reference right creates an obligation someone has to honour later. Trace them before you offer them.
Example · Technology licence
The owner asks for more cash.
You want rights to technology someone else controls, and their answer is a bigger number. Raising the cheque is one option. It is rarely the only one, and often not the cheapest way to give them what they actually want.
Retained fields
Limiting your licence to specific applications or territories can cost you little while preserving what the owner most fears losing.
Royalties and upside
Converting part of the cash into participation moves value into the future and shares outcome risk rather than expanding your upfront outlay.
Milestones and reversion
Payments tied to development or commercialisation milestones, with rights reverting on failure, reduce their fear that the technology stalls in your hands.
Control and attribution
Approval rights over certain uses, or named attribution, may matter to the owner far more than the incremental cash they asked for.
Minimum commercialisation obligations
A commitment to actually work the asset can be worth more to them than a larger cheque, and costs you nothing you were not already intending.
The effective value each side captures moves substantially across these versions while the headline consideration may barely change. A field-limited licence with royalties and reversion can leave the owner better off on their own terms and cost you less than the cash increase you were about to concede.
Architectural note
Value Creation asks what is available. Value Capture asks what the proposed structure lets each side keep.
Capture is used here as a stress-test lens rather than a claim about the fundamental dimensions of a deal. Burden, Risk, Commitment, and Timing all carry economic consequences, and they are kept visible rather than collapsed into one net-value figure. Reducing a deal to a single number is where most of the useful information disappears.
Capture audit
Run this against a live offer.
- 01What value does this deal create for me?
- 02Which parts of that value must I preserve for it to remain worth doing?
- 03What is the other side actually asking for, and what underlying problem does it solve?
- 04What is the full effective cost of our current offer, not just the headline price?
- 05What concessions have accumulated across economics, scope, rights, risk, support, timing, and optionality?
- 06Could I solve their real constraint with a variable that costs me less?
- 07What could they change that is cheap for them and valuable to me?
- 08If I make this move, what second-order effects appear elsewhere in the deal?
- 09Does the resulting transaction still remain worth doing for me?
Next
Some of the most expensive things in a deal never appear in the price.
Implementation effort, customisation, coordination, switching, retraining, and ongoing administration are all real costs that no line item shows. Take the audit above to a live offer, then continue to Burden — or work a whole transaction end to end with the Deal Geometry Map.