One thing to remember about product pricing is that value and costs are separate things. You can sell a very great margin if you provide value to the customer. And you can lose money because eve though your price was low, people did not perceive the value as being worth the price.
Earlier today an entrepreneur asked about thoughts on product pricing. I’ve found that product pricing evolves over the life of the startup based on a number of factors including competitive dynamics, target markets, corporate strategy, and overall value to the customer. Here are a few more specific ideas around pricing:
- Product Pricing Properties – Price based on value and align it so that as the customer gets more value, they pay a corresponding amount
- Product Pricing Doesn’t Matter Pre Product/Market Fit – Charge something, even if it’s small, so as to get higher quality feedback
- Published Prices Aren’t Always the Main Business Model – Consider potential indirect ways to make money that aren’t as obvious
- Pardot’s Pricing Progression Through the Years – Read a case study to see how pricing evolved over five years
Pricing should be treated like everything else in the startup: an iterative element that warrants regular experimentation and improvement.
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