The dos and don’ts of a product pricing strategy
There is a lot to consider when determining your product’s pricing strategy. If you haven’t done product pricing before it can be an intimidating process. To assist in the process here is a list of dos and don’ts from my own experience in product pricing.
Analyse the competition. This is how most product prices are set, understanding the competitive market and where your product sits in the market is important.
Look at the cost of product substitutes. Perhaps your product is truly innovative, and you have no direct competition. However, you are competing for dollars that are spent elsewhere. Take some time to consider what those dollars are being spent on instead.
Trial several different price points. Using different campaigns through Kickstarter or Facebook ads etc you can trial different price points for your product and see how the market responds.
Ask your customers. Get an indication of price point from your existing customers. Ask them directly at what price is it too expensive and at what price does it feel like a steal. This helps to gauge the value that your existing customers feel they receive.
Overcomplicate. Keep your pricing simple especially early on or you will put off early adopters from buying.
Sell based on a negative value. Focus on the positive value your product delivers. Saying your product will deliver cost savings because you need less stuff isn’t always the incentive you think it is.
Think of prices as fixed. Your prices can be changed at any point in time. So, if it isn’t working then change it up.
Treat all size customers as the same. Different sized customers will derive a different level of value from your product. Consider setting your prices with this in mind.
TAKEAWAY: Following the dos and don’ts provided is a quick way to get your product pricing strategy underway. The most important thing to remember is that your pricing strategy isn’t permanent and can be changed at any time. So, if you get it wrong you can always change it.