Question: What are some easy alternative ways to determine where your customer sees your pricing in the market? Or worse yet… when you suspect that your pricing has been discounted heavily from the start and higher pricing has never been explored? – J
Answer: Hi J, from your question I assume you believe your product is priced too low, but you don’t have evidence and you don’t have resources for a big pricing project to generate data.
The most important and easiest way to do this is to listen to your buyers.
Have conversations with them about your product and your value. During these conversations, you are trying to learn about many things, but do it in a conversational tone. I’ll list a bunch of questions, but please don’t just go ask these questions – have a conversation.
(Have I said the word conversation enough yet?).
Having Conversations With Your Buyers is the Best Way to Determine Your Pricing (& Value)
Here are some questions to ask to determine pricing & value:
- Have you ever bought a product like this before? How much did you pay?
- If you don’t buy this product what will you do?
- What do you expect this product to do for you?
- Would you guess how much this would make or save your company? (B2B only)
- What type of buyer do you think would get the most value from our product?
- How much do you think other people would pay for this product?
- What else do you wish it could do?
You will learn so much just by talking with potential buyers. Do this a dozen times and you’ll get a very good feeling for price directionality (too high or too low).
Here is another hint:
Think carefully about who you talk with.
Do they already have a product like this? Are they currently shopping? Are they not shopping, but you think they are a good candidate? What market segment are they in?
My guess is if you’re looking to raise prices significantly it would be on buyers who haven’t bought or shopped before.
Like all pricing problems, you are estimating your buyer’s willingness to pay (WTP). You want to characterize the buyer, the competition, the decision, and the benefits. Some good conversations can get you pretty far down that path without a big investment. Oh, and you should be having these conversations anyway!!!
I hope that helps.
Tags: ask a pricing expert, pricing foundations, pricing strategy