Is Your Pricing Too High?

How do you know if your price is too high? A few things could be happening: the product isn’t actually as valuable as you are selling, you’re talking to the wrong customers, you’re not conveying the value, or any combination of the three.

Product isn’t actually valuable

This could be that you’ve identified a problem that isn’t critical or that the solution isn’t good enough to for a customer to buy. This can be difficult to determine but requires keen observation—especially to rule out some of the other causes below.

Talking to the wrong customers

If you have any sales, look at what the most successful customers have in common (not just any customer otherwise that could be misleading). In particular, what was the key challenge they were facing and how did your product address that. Similarly, look at sales lost or customers that churned to see what they had in common. Focus on a single customer profile until you’ve really figured it out before moving on to the next.

Not conveying value

You can have the best product in the world and people still won’t buy it if you can’t convey the value it creates for customers. In B2B sales for example, what something can be valuable but it takes considerable motivation to do something about it. Finding the right hooks are important to get a potential customer to take action.

See also:

  • Pricing the Perceived Value Gap

    Cost basis tends to get the most attention when it comes to pricing. I remember from business classes in college would spend endless hours on cost plus pricing, margins, and so on. However, perceived value—the difference between the price and what people think it’s worth—gets overlooked. If the perceived value is high relative to the price, it a no-brainer to buy.