Pricing: Do's and Don'ts for Product Marketing
Pricing has the power to make or break your product ...
Pricing has the power to make or break your product - set the bar too high, and you’ll price your customers out of the market. Set your price point too low, and risk undermining the quality and value of your product.
Join me at the Product Marketing Festival on July 12 to navigate the nuances of pricing and what it means for the product marketing team.
Warren Buffet sums it up well. Pricing is the decision power.
The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.
- Warren Buffett, Chairman and CEO at Berkshire Hathaway
Bias in purchase decisions
3 important biases that I have come across are:
Power of now: The longer wait for a product is not ideal.
Social proof: Recommendations and reviews from others
Scarcity bias: As availability of a product decreases, it’s more desirable.
Pricing Models
Each pricing model can be flexed to make it work for you and your team. Find the right value metric and then derive the right model for your business.
Examples:
Fitbit vs Flare
With a strong brand perception, Fitbit is priced higher than the competition.Apple Airpods has premium pricing even within its own portfolio. At times, the cheaper option may work better, but customers are ready to pay the premium price to keep up with the shifts in the market.
Goodfood pricing: Goodfood, a meal delivery kit offers three core packages: Easy Prep Basket, Classic Basket, Family Basket for you to choose tailored to your needs and expectations.
Did you know that cheap is not always the best. This study shows that best has more search interest vs cheap on google.
Our decision process
Have you wondered how do you take into account price when you go to the grocery store or buy a new phone online?
What attributes are most important to make the decision?
How many choices is too much to allow room for adjustment?
If given a choice, would you rather have fewer choices?
I am always overwhelmed when I walk by the olive oil or jam sections. Do I need 100s of options to make one choice. Not really..
Most times, I find and choose products that are in mid range - not too high and not too low to question its quality. Find the balance between price and value.
Product Marketing | TED Talks to watch (1/3)
Whether you are in product marketing or not, these TED talks will inspire you to be a changemaker, to challenge the status quo and ask why in every step of your career.
Sharing 3 TED Talks relevant to pricing.
0:00 - 8:03 - How we choose study
How we make choices and how we feel about the choices we make - uncovers some surprising attitudes about our decisions.
(17:06) The American dream depends on limitless choice. This promises: freedom, happiness, success. "You can have anything, everything."
0:00 - 4:18 Business decisions + jam selection experiment
We all want customized experiences and products -- but when faced with 700 options, consumers freeze up.
3. Pricing
(0:00 - 4:14) How can we assess our true potential?
2:15 Evaluate my pricing, my value, by asking key value questions. What are my clients' needs and how do I meet them? What problems do I solve for clients? What value do I add?
05:14 it's so important to find your own voice, a voice that's authentic and true to you.
07:05 Being properly valued is so important.
Reflection:
What is the biggest pricing challenge for your team?
How do you approach pricing today - which pricing methodology resonates for you best? Is it one or a combination from the list below?
>> Cost plus, competitor based, value based, dynamic, usage based, freemium or premium pricing
When we discussed in our class, we realized our challenges are similar. And we approach pricing differently based on product lifecycle - from growth to maturity. Here are the top 3 challenges:
Not understanding the value to the customer.
Sometimes priced all over the place!
Lots of competitors, all with similar but different pricing styles.
Join me at the Product Marketing Festival on July 12 to navigate the nuances of pricing and what it means for the product marketing team.