“Pricing is a balancing act that involves psychology, art and science.โย
Common Pricing Mistakes
The most common pricing mistakes you should avoid:
- Overcomplicating.ย This only wastes time and discourages early adopters from using the product. Instead, launch your product with one or two pricing tiers (three at the most) and add pricing segments for customers with different needs over time. When it comes to your startupโs pricing in the first 12 to 24 months, simplicity should be the rule.
- Selling Negative Versus Positive.ย Some products or services allow companies to operate with fewer employees. Telling potential customers about how much theyโll lower costs by laying off employees thanks to your product is an example of negative value. Instead, talk about the aspirational value of your product when selling it to prospective customers. Some examples of a productโs aspirational value are productivity increases, revenue growth, simplified workflows, page view growth, and more.
- Thinking Pricing is Static.ย You can change your productโs pricing at any time and should experiment with it. Itโs not a good idea to change your productโs prices all the time as that will annoy and confuse customers but markets, competitors, products, customers, and consumer behaviors will change. As these variables change, your pricing should likely evolve as well.
- Not Thinking Size Matters.ย Enterprise customers expect very different pricing from small businesses, medium size businesses, or consumers. If you want to sell to the Fortune 500, you should know companies of that size expect to pay at least 5-figures and sign contracts when purchasing products or services. On the other hand, most small businesses expect to pay month-to-month for the products they use. Educate yourself about what prices different sized businesses will want and expect to pay for your product.
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