Want to know how to price your product right?
One of the toughest parts of taking a product to market is getting the pricing right and it’s no surprise that pricing is such an important part of any business’ strategy.

Pricing has a direct impact on revenue, profitability and valuation, and is closely connected to your product’s positioning and how the market perceives it.

Also, poor pricing is one of the “Top 20” factors for startup failureaccording to a CB Insights report. However, large companies may also struggle to get their pricing right, especially when creating new products. 

Many of the common mistakes center on not formulating a clear pricing strategy and only considering it as an afterthought. 

If you are not explaining the value of your product, then customers will focus on cost and not understand the value you are creating. Does your product make money, save money or time? How much?

Many product managers fall into the trap of relying on their own emotional perceptions of the product as the benchmark for what their customers perceive it will be. This way of thinking can push customers away as their perceived value (and the price) may not match that of the product.

For B2B products, understanding what budget you’re targeting is crucial in determining your product’s price point. This means knowing the corporate budget of your target segment as well how many people are involved in the decision making process.

A well-defined pricing model can be customized for different markets, segments and audiences; but customers need to be clear what they are getting when paying for your product.

Remember, getting your pricing strategy right is both an art and a science. The science is the research and due diligence of understanding your customers and competition inside-out. The art comes through experience and having a gut feeling of what works and what doesn’t. Using this combination when adopting a pricing model is crucial as one is no good without the other. 

Pricing is not ‘set-in-stone’; it’s changeable and flexible. But it’s up to you to keep up with market trends and forecasts within your industry and geography and determine what works best for you.

Too often products are developed without a clear pricing strategy in mind only to be shunned by customers. Understanding the importance of forming a sound strategy is an important first step on the journey to delivering successful products.

Happy building, scaling and pricing! 

Building a pricing strategy for your APIs

As an API is a unique product, three aspects need to be considered when adopting a pricing strategy – Read More

Do you talk about value?

Though your B2B product’s pricing strategy is a significant part of its success, you also need to ensure a clear articulation of its value.  Read More

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Want to know more about how to combine art and science into your product building? Get in touch and let’s talk!