New Product Pricing

Pricing for a new product is really just a shot in the dark. What features go into what editions? What are the up-sell hooks? In my experience it is much easier to lower prices than to raise them. I’d recommend starting out with a price that is twice what you feel is right. Why? It is very easy to give “preferred customer discounts” and come down on the pricing, making the new client feel special. Throw in membership to your “product advisory council” and you’re golden.

Another huge consideration: credit card price range or CFO price range. This is a big deal. Having a buyer be able to put the product or monthly fee on their credit card is a much easier sale than one that requires a purchase order and needs sign-off from the CFO. Wait, aren’t there plenty of deals between the $1,000 (credit card) and $50,000 (CFO sign-off) range? Yes, those are available but you don’t want to play in that space. The amount of time to complete a $20,000 deal is the same effort as a $50,000 deal. If you have to do a full-service, long sales cycle process, make sure your package is at least $50,000.

My final thoughts: don’t spend much time on pricing, go to market quickly, and listen to your prospects.