Co-founder and CEO of Price Intelligently Patrick Campbell deconstructs and walks through the elements of a pricing strategy to enable startups to acquire customers more effectively.
Define Your Customers
- Target 3-5 buyer groups to test and give each buyer cohort a persona.
- Assign demographic and behavioral descriptions to each persona (e.g., Startup Susan, Mid-Market Malik, Enterprise Ernesto).
- Establish customer categorization to then tackle value proposition.
Collect Data from Potential Customers
- Focus surveys to test two elements: features and price sensitivity.
- For feature preference surveys, list a set of features to evaluate, hone in on the extremes, and ask about what they most prefer to use.
- For price sensitivity surveys, the two critical elements are value metric (i.e., how you charge) and willingness to pay.
- For value metric surveys, use the relative preference methodology.
- For willingness to pay surveys, list a simple set of tasks to figure out price elasticity.
Two Approaches to Launch Surveys
- Release two surveys every three weeks.
- Utilize companies for help if the issue is getting large enough sample sizes for each of your customer personas.
Applying Your Findings
- Plot out price elasticity using the same willingness to pay questions.
- The pricing page should be instructive, intuitive, and straightforward.
- Adjust your change in pricing every quarter or two to align with how your product changes and improves.
- Do your best to get the pricing right as early as possible to avoid bad blood with customers.