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What Tech Marketers Can Learn from Steep Microsoft Surface Prices?

Let’s face it, Microsoft’s new Surface gadgets are not “cheap.” Microsoft Surface Pro 4 is listed at $899 while the Surface Book has a hefty price tag of $1,499, and yet the company announced that the “Surface Pro 4 is the fastest Surface adopted in business ever.” Surface’s fast adoption is being driven by world-wide pre-release commitments by institutional, public sector, financial services and educational buyers. This story-in-the-making offers quite a few lessons for tech marketers especially in the realm of pricing premium products and solutions.

Pricing and Monetization Strategy Blog - Pricing Innovations

Focus away from the price

One of the golden guidelines in pricing is the fact that customers do not want to think about price, and Microsoft is executing on that guideline superbly. When a customer makes a purchase decision they don’t make that decision on the basis of the “exchange” itself but on the basis of how well the product delivers on for what they are purchasing. How expensive or inexpensive a product is perceived to be is inherently subjective, and it depends on in what contexts a user needs it and how highly he/she values his/her benefit from it. Particularly, a premium product minimizes a user's concern about how fitting the outcome of the user experience is, and therefore, it should be priced commensurate with the value of that fit.

Focus on the benefits of your product

Surface is taking the focus away from the price itself and putting it back on the benefits of the product. Surface refines its promise around “productivity,” enabled by advanced technology, versatility, and performance. It’s as if Microsoft is saying 'you focus on being productive and creative, we’ll make sure that we have the device for you to do that.' The genius in that approach is the fact that it enables Microsoft to price Surface at such premium levels because it’s next to impossible to determine the perceived value of an experience such as enhanced productivity and creativity. Think about it, what’s it worth to you?

Focus on the needs of your most sophisticated users

One of the reasons why new Surface gadgets are considered category defining devices, and also priced accordingly, could be because they focus on solving for the needs of Microsoft’s most sophisticated customers. Cyril Belikoff, Senior Director – Microsoft Surface, states that Surface was “inspired by the ways our business customers are using our devices to push the limits of performance and productivity.” The business customer use cases establish the high price benchmark and reference value for the marketplace, thus it becomes possible to achieve the fastest ever adoption that Microsoft is enjoying.

Perhaps, the biggest lesson of all, for tech marketers out there, is that the common fear of taking your products to market with a high or the highest price tag is not a justified one. You can price your products at category defining levels provided that you

  1. Focus away from the price itself, and instead

  2. Focus on the benefits of your product – especially if your product was built to

  3. Satisfy the needs of your most sophisticated users, whether your products are hardware or software.

Which brings us to one last thing that will be interesting to watch unfold. Microsoft is further blurring the lines between hardware and software. In a Marketplace Tech interview on October 30, 2015 , Corporate VP of Microsoft Devices, Panos Pannay said “Microsoft is a product company now.” Referring to Surface product line Pannay added “these are products, these are what people use. And I don’t think the world is in a place where it’s about software or hardware anymore. We draw too much of a line there and that line has to go away.” We’ll all be watching on how successfully they can execute on that.

Ready to begin your own pricing innovation?

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