Startup CXO

Chapter 68Pricing and Packaging

Pricing

Pricing and packaging are two areas where many startups trip up, either because they don't do discovery well in the beginning or they don't understand the competitive landscape. If you're selling into an existing market but maybe you have a new mousetrap, you've got a slicker product and more innovation, or deliver the solution or the technology faster, the best approach is to price the way people buy it. Don't try to break the model. If it's a per seat model, then don't try to change that structure, try to fit within it so that you're competitively priced. Unless you can deliver materially more value that enables you to get a higher price, then your best strategy is to be competitively priced.

It's always a matter of testing and having a working theory of what can work so that you're not just going in asking someone, “Well, what would you pay for this?” Because their response is likely to be, “Well, you know what, I'm going to give you a low price of what I would pay for it.” But if you can create scenarios that help someone understand how the value and price equation works, then you have something that they can hold on to and you can help them understand as you're pricing, what value you're delivering at the same time.

If you're going to a brand new space, then it might require a little bit more experimentation to determine pricing. The strategy here is to align your pricing model with how the customer uses your product. If they use ...