“Product-market fit” is one of the most popular phrases in startup and product circles. It tells you that someone wants what you’re selling. That’s useful. But when it comes to pricing, it’s not specific enough.
As a pricing expert, I care much more about product-segment fit. That’s where real pricing power begins.
Product-market fit is the wrong tool for pricing
Product-market fit asks, “Does anyone want this product?” And when you get traction, the answer is yes.
But pricing doesn’t hinge on whether someone wants it. Pricing hinges on who wants it, what problem they are solving, and how much value they perceive in your solution.
That’s where product-segment fit becomes essential.
What is product-segment fit?
Product-segment fit means your product solves a specific problem for a specific group of buyers who share that problem. Not just people who might use the product, but people who are in the market because they have a foundational problem they need solved.
Once you’ve defined that segment, you can build a powerful product portfolio with multiple ways to solve that problem, each offering a different scope of solution and a different price.
The Value Architecture
This concept fits directly into the Value Architecture framework:
1. Foundational Problem → Market Segment
Start with the reason buyers enter the market. What problem are they trying to solve? This is the foundational problem. It is binary. They either have the problem or they don’t. If they don’t, they are not in your segment. This is where the buyer decides, “Will I buy something to solve this?”
2. Problem Scope → Product Portfolio
Now that you know the segment, you can build a portfolio of products that solve the problem to different degrees. This might be a good-better-best structure, a modular product, or a base offering with options. This is where the buyer decides, “Which one will I buy to solve my specific problems?”
3. Situational Context → Price Segmentation
Even if two buyers want the same product, differences in context, such as urgency, channel, or buyer type, can influence what they are willing to pay. That is price segmentation. We will save that topic for another blog.
Example: Project management software
Let’s take a common product category: project management software.
Product-market fit says, “People are using it—freelancers, teams, enterprises.” Great. But that tells us nothing about who values it, or how to price it.
Product-segment fit breaks those groups into distinct segments, each defined by a foundational problem:
- Freelancer: I need to stay organized across multiple projects and deadlines, working solo.
- Team: We need to coordinate, stay aligned and hit deadlines as a group.
- Enterprise: We need to manage risk and governance across departments and teams.
These are not just different scopes of the same problem. They are fundamentally different problems, each requiring a different product approach. A freelancer has no need for audit logs. An enterprise cannot use a tool without them.
If you treat these as one segment, you will build one bloated product, frustrate users, and struggle to price it well. With product-segment fit, you build focused portfolios—one for each segment—with pricing based on the value created in that specific context.
How to know if you have product-segment fit
Ask yourself:
- Do all the products in this portfolio solve the same foundational problem?
- Are the differences between offerings based on how much of that problem they solve?
- Would a buyer in this segment immediately recognize which option is for them?
- Are you solving one problem well, or many problems halfway?
If the answers aren’t clear, you might have product-market fit—but not product-segment fit.
Why this matters for pricing
Product-market fit gets you usage. Product-segment fit gives you pricing power.
When you understand the foundational problem that defines a segment, you can:
- Build the right product portfolio
- Price each product according to the value it delivers
- Apply pricing strategies that make sense for that specific segment.
And here is one more simple test. If a buyer struggles to choose between products that were built for different segments, your segmentation is not clean enough. The product decision should be obvious. Confusion is a signal that pricing will be just as unclear.
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Tags: pricing, pricing foundations, pricing metrics, pricing skills, pricing strategy, pricing value
