Great, You Have a Product! But Do You Have a Business?
Pricing is about how the exchange of value takes place between your company and your buyers. Therefore, it touches on all aspects of value:
Value creation: What benefits do your buyers and users get from what you’re offering?
Value communication: How do your buyers perceive the benefits they'll receive in relation to their current state and needs?
Value realization: What’s your buyers’ willingness to pay to acquire those benefits?
Pricing is the point at which the value you have created exchanges hands.
Most product and marketing teams rely on pricing research to find out the right pricing structure before launching a new offering. If it’s done correctly and timely, however, pricing research can help uncover other potential obstacles and problems you may have early in the product development process, such as:
Does the problem you’re solving really exist or are your potential buyers content with their current state and substitute ways of accomplishing similar results?
Can you really solve for your buyers’ needs, pains, and gains?
How will your buyers access that solution? How will they benefit from it?
Can you solve for your buyers' needs better than the existing alternatives so that they would be willing to acquire it and even pay for it?
What if you can’t solve for all your buyers’ pains and gains? Is there a segment of the population whose needs you can address? How big is that segment? How addressable is it?
What would it take for you to develop the solution your buyers are willing to acquire? Can you develop your solution with a profitable enough cost structure?
How much are people willing to pay for your solution?
How are your potential buyers and users making their purchase decisions?
What reference points are they using when deciding to adopt your solution or not?
What strategic resources do you have within your access to be more profitable than other alternatives in the market?
These and many other considerations are critical when developing a product or an offering and they can be identified correctly and early on using pricing research. Download our Profitable Pricing Guide - How to Conduct Value-based Pricing Interviews and learn the art and science of conducting effective pricing research and interviews.
Ready to begin your own pricing innovation?