This is the most common question organizations have when establishing their market strategy for their products, software, IP, widget, etc. By the very nature of the question the answer far too often is almost always subjective. Usually it comes down to how much can we get without leaving money on the table or losing customers? With this approach, it is amazing how many organizations will throw a number into the wind and watch what happens. More customers than anticipated, then the price must be too low, so let’s raise the price. Not enough customers, the price must be too high, so let’s lower the price. And the cycle goes on and on.
This is a subjective approach based on a best guess subjective response to the question. While this sounds farfetched and unscientific, it is typically the only way an organization knows how to tackle the question. In some cases, an organization may start with the competition’s price point and assume they must have done their homework. Bad assumption. This just adds to the number of missteps and the obviously dangerous outcome. There are many attributes that organizations have data and should be applied to this calculation, but they don’t know the steps to take and how the data fits into the equation.
As a very basic level, they should be thinking about the value of specific attributes and features of their product and how their customers will categorize these features based on usefulness and importance. Further to this point, organizations need to analyze their target customer base and segment this base that considers the requirements of each segment and how they intend to touch each segmentation factors into the price points. Are the touch points managed online, a direct sales force, through partners or all of these together. In addition, internal processes and challenges must also be assessed and if possible, improved. The most perfect solution falls apart quickly if not properly supported on the backend.
This is only the 100,000’ level of factors and issues that play into answering the question. There is no one solution fits all. Instead there is a journey to be taken to break down the key data points and aspirations of the organization to make a determination. Each organization must be introspective and truly assess their purpose, value and challenges; of their goals and aspirations; of the competitive landscape and the dent they want to make in this landscape to even begin driving to the right solution.
This is a subjective approach based on a best guess subjective response to the question. While this sounds farfetched and unscientific, it is typically the only way an organization knows how to tackle the question. In some cases, an organization may start with the competition’s price point and assume they must have done their homework. Bad assumption. This just adds to the number of missteps and the obviously dangerous outcome. There are many attributes that organizations have data and should be applied to this calculation, but they don’t know the steps to take and how the data fits into the equation.
As a very basic level, they should be thinking about the value of specific attributes and features of their product and how their customers will categorize these features based on usefulness and importance. Further to this point, organizations need to analyze their target customer base and segment this base that considers the requirements of each segment and how they intend to touch each segmentation factors into the price points. Are the touch points managed online, a direct sales force, through partners or all of these together. In addition, internal processes and challenges must also be assessed and if possible, improved. The most perfect solution falls apart quickly if not properly supported on the backend.
This is only the 100,000’ level of factors and issues that play into answering the question. There is no one solution fits all. Instead there is a journey to be taken to break down the key data points and aspirations of the organization to make a determination. Each organization must be introspective and truly assess their purpose, value and challenges; of their goals and aspirations; of the competitive landscape and the dent they want to make in this landscape to even begin driving to the right solution.