{"id":82754,"date":"2024-09-05T12:33:53","date_gmt":"2024-09-05T11:33:53","guid":{"rendered":"https:\/\/www.prodpad.com\/?p=82754"},"modified":"2025-01-13T16:24:44","modified_gmt":"2025-01-13T16:24:44","slug":"product-pricing-strategies","status":"publish","type":"post","link":"https:\/\/www.prodpad.com\/blog\/product-pricing-strategies\/","title":{"rendered":"Product Pricing Strategies: Choosing the Right Approach for You"},"content":{"rendered":"\n<p>Choosing your product pricing strategies is a fine science. There\u2019s far more to it than throwing pricing models at a wall and seeing what sticks. There are a lot of factors you need to think about, and a detailed process to follow.&nbsp;<br><br>You don\u2019t want to be the Product Manager that gets your product pricing strategies wrong. A price that\u2019s too low leaves money on the table, and one that\u2019s too high puts potential users off. It\u2019s like Goldilocks and the Three Bears, you want a pricing model that sits just right. That satisfies your customers like a perfect temperature bowl of porridge.&nbsp;<br><br>If you\u2019ve been guilty of pricing your product similarly to your competitors and calling it a day, it\u2019s time to dig a bit deeper into your product pricing strategy.<br><br>Now pricing strategies are firmly in the business management world, and if you open up a textbook you\u2019ll find A LOT of different strategies, theories, and more. We\u2019re going to focus on pricing strategy from a Product Manager\u2019s perspective, making sure you know how to translate the business theory into practical action for your own product pricing.<br><br>If you want advice from one SaaS PM to another, check out our article below with insight from ProdPad Co-founder, Janna Bastow \ud83d\udd3d: <\/p>\n\n\n\n<a href=\"https:\/\/www.prodpad.com\/blog\/how-to-price-product\/\" rel=\"noopener\" class=\"callout callout__inline-cta-secondary flex inline-cta--link\">\n    <div class=\"callout__content\">\n        <p class=\"font-weight-bold\">How to Price a Product &#8211; From One Saas PM to Another<\/p>\n    <\/div>\n    <div class=\"callout__cta btn-group\">\n        <span class=\"btn btn--arrow\"><\/span>\n    <\/div>\n<\/a>\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-product-pricing-strategies-nbsp\">What are product pricing strategies?&nbsp;<\/h2>\n\n\n\n<p>A product pricing strategy is the overarching plan for how a company prices its products or services. Think of it as the philosophy that dictates how you\u2019re setting your price. It\u2019s the why behind the specific pricing model you choose to run.<br><br>See, you want to give your pricing some thought. It\u2019s not enough to just look at what your competitors are pricing and pitch your product somewhere around there. You may as well be throwing darts with your eyes closed and charging whatever number it hits. Your pricing needs to be considered. This is what a product pricing strategy allows you to do.&nbsp;<br><br>There are multiple strategies you can adopt, and you can jump between them all based on various factors and influences. Things like your positioning, competitors, market, and business goals will reflect what pricing strategy works for you.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-s-the-difference-between-product-pricing-strategies-and-pricing-models\">What\u2019s the difference between product pricing strategies and pricing models?<\/h3>\n\n\n\n<p>This is something that you don\u2019t want to mix up. A pricing strategy and a pricing model are not the same thing. If product pricing strategies are the <em>why<\/em><strong>, <\/strong>then the models are the <em>how. <\/em>They\u2019re the specific methods you\u2019ll adopt when setting up your pricing.&nbsp;<br><br>A pricing strategy is more conceptual and broad, whereas a pricing model is the specific details of what you\u2019ll be doing. Your product pricing strategy will feed into what model you choose to deploy.&nbsp;&nbsp;<br><br>Some popular pricing models include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Freemium pricing<\/strong>: Freemium pricing offers a basic version of a product for free to attract users while generating revenue from those who pay for premium features. Freemium is increasingly linked to the<a href=\"https:\/\/www.prodpad.com\/glossary\/reverse-trial\/\"> reverse trial<\/a>.&nbsp;<\/li>\n\n\n\n<li><strong>Tiered pricing<\/strong>: Tiered pricing provides different product versions or service levels at varying price points, catering to different customer segments.&nbsp;<\/li>\n\n\n\n<li><strong>Flat-rate pricing<\/strong>: Flat-rate pricing involves charging a single price, either as a one-time purchase or a recurring subscription, for a product that performs a few key functions exceptionally well.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-different-product-pricing-strategies-nbsp\">What are the different product pricing strategies?&nbsp;<\/h2>\n\n\n\n<p>You\u2019ve got a whole host of different product pricing strategies to choose from. They all have ideal use cases and can suit various types of businesses and products. When looking at pricing strategies, you\u2019ll find that three main ones are often talked about the most. These are the top-dog pricing strategies that the majority of products will gravitate towards. These are:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Competitive based pricing&nbsp;<\/strong><\/li>\n\n\n\n<li><strong>Value-based pricing<\/strong><\/li>\n\n\n\n<li><strong>Cost-plus pricing\u00a0<\/strong><\/li>\n<\/ol>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"560\" src=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-1024x560.png\" alt=\"break down of the three main product pricing strategies\" class=\"wp-image-82756\" srcset=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-1024x560.png 1024w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-300x164.png 300w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-768x420.png 768w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-1536x841.png 1536w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Pricing-Strategies-2048x1121.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Here\u2019s a closer look at these three to help you identify the best one for you.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-competitive-based-product-pricing-strategies\">Competitive based product pricing strategies<\/h3>\n\n\n\n<p>This product pricing strategy is where your price points are most heavily influenced by your competitors. When following this product pricing strategy, you\u2019re placing more value on the outward market instead of looking inward at your costs.&nbsp;<br><br>This pricing strategy is best used when you offer similar products or services to your competitors. Following this pricing strategy can lead you to three main approaches to try.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Lowest cost offering<\/strong>: When basing your pricing on competitors, you can choose to position yourself as the lowest cost offering, undercutting the other prices in the market. This strategy can make you more attractive to customers, but you need to be careful that you don\u2019t cut into your profit margins too much. You should also have a plan in place to eventually move customers to a higher profit option.&nbsp;<\/li>\n<\/ol>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li><strong>Premium price points<\/strong>: With this approach, you can choose to charge more than your competitors to hopefully stand out as a luxury, higher-quality option. You\u2019ll need a strong brand to pull this off and a killer product that offers higher value than your competitors.&nbsp;<\/li>\n<\/ol>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><strong>Price match:<\/strong> Your third option is to price match with your competitors. Here you guarantee that your product will be the same as a competitor. This can be risky as your cost base may not be the same as those you match, and it really only works best if you have multiple products to sell.&nbsp;<\/li>\n<\/ol>\n\n\n\n<p>There are many advantages to using competitive based pricing. Customers won\u2019t be surprised by how much you charge, and you will instantly be seen as a viable option by customers. It\u2019s also a very quick approach to pricing, and by piggybacking off your competitor&#8217;s pricing you can benefit from their market research without having to do too much yourself.&nbsp;<br><br>The drawback is that you\u2019re heavily pressured by your competitors. If they change, you\u2019ll need to react. Plus, by following this product pricing strategy, your profit is at risk as you may have a higher cost base.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-value-based-product-pricing-strategies\">Value-based product pricing strategies<\/h3>\n\n\n\n<p>Value-based product pricing strategies involve looking at your customers to price your product based on how valuable they find it. This is all focused on customer perception, so you need to have a drilled-in knowledge of your target market and audience. This is where <a href=\"https:\/\/www.prodpad.com\/blog\/collect-customer-feedback\/\">collecting customer feedback<\/a>, creating <a href=\"https:\/\/www.prodpad.com\/glossary\/user-personas\/\">user personas<\/a>, and more come into play.&nbsp;<br><br>This is a tough pricing strategy to get right, which is why many opt for alternatives. But if you stick at it, you\u2019ll get rewarded.&nbsp;<br><br>You need to research your customers and find out what problems your product can solve for them and the monetary benefit your service brings. This can then guide your pricing, in addition to further testing and experimentation.&nbsp;<br><br>One great benefit of this pricing strategy is that you can charge a higher price as long as you get your <a href=\"https:\/\/www.prodpad.com\/glossary\/value-proposition\/\">value proposition<\/a> right. You also build a deeper understanding of the market and your customers due to all the research involved, which can help you make a better product.&nbsp;<br><br>It is time-intensive and not a quick win, and not all your customers will agree on a perceived value. It\u2019s one of the hardest pricing strategies to adopt, but one that\u2019s worth the challenge.&nbsp;<br><br>Because, if you are confident you have a highly valuable product &#8211; one that customers perceive as such &#8211; then you can set a price to reflect that importance. Value-based product pricing is where the highest profits can potentially be realized. When a product is high-value, often price sensitivity is less of an issue and you can price based on the perceived value rather than your competitor&#8217;s pricing or even your own cost base.&nbsp;<br><br>Which brings us onto the subject of your cost base\u2026<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-cost-plus-product-pricing-strategies\">Cost-plus product pricing strategies<\/h3>\n\n\n\n<p>The good news is that cost-plus pricing is perhaps one of the easiest to wrap your head around. With this strategy, you\u2019re simply choosing how much extra you want to charge for your product based on the costs to develop it.&nbsp;<br><br>For example, if you sold TVs, cost-plus pricing is deciding that you want to sell the TVs for 30% more than it costs to make them. This ensures that for every item sold, you\u2019re getting a profit of however much extra you\u2019re charging for them.&nbsp;<br><br>But how do you decide how much extra you want to charge on your costs? Well, that\u2019s just down to how much profit you want to make on each item. Of course, there\u2019s a caveat to that. Everyone wants to make a gazillion percent profit margin, but customers aren\u2019t going to pay a gazillion dollars. You need to set a cost-plus price that\u2019s fair and that somewhat resembles the wider market. And to do that: pull in some competitive based principles.&nbsp;<br><br>One of the hardest parts of cost-plus pricing is working out your cost per unit. You need to consider everything that goes into building your product and getting it out there. It\u2019s not just development and manufacturing costs, it\u2019s marketing, salaries, and office rent. If you don\u2019t consider everything, you may price your product at a point where you still make a loss.&nbsp;<br><br>Now, cost-plus pricing isn\u2019t going to work for every Product Manager. It\u2019s primarily used by those selling physical products who want to keep things simple. It\u2019s not really ideal for those looking to maximize profits. The truth is that for most Product Managers, this would be the wrong strategy to take. A better pricing strategy needs to factor in customers and competitors, which is why the alternatives are often preferred.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-alternative-product-pricing-strategies-nbsp\">Alternative product pricing strategies&nbsp;<\/h3>\n\n\n\n<p>Although we\u2019ve just talked about the big three strategies, there are other options you can consider or incorporate into your decision-making.<br><br>One of the more well-known options is the are Kotler\u2019s pricing strategies:\u00a0<br><br>If you want to really get your business theory geek on over your pricing strategies, you can take a look at <a href=\"https:\/\/www.mindtools.com\/an7ep8c\/kotlers-pricing-strategies\" target=\"_blank\" rel=\"noreferrer noopener\">Kotler&#8217;s pricing strategies<\/a>. Philip Kotler is part of the business management theory old guard and his matrix of pricing strategies is worth reading up on.\u00a0<br><br>In a nutshell, his matrix helps you plot your product based on price and quality to see if you\u2019re offering a service that\u2019s premium, economy, a rip-off, or superb-value to name a few.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"937\" height=\"1024\" src=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Kotler-Pricing-Strategy-Matrix-937x1024.png\" alt=\"Kotler product pricing strategies matrix\" class=\"wp-image-82755\" srcset=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Kotler-Pricing-Strategy-Matrix-937x1024.png 937w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Kotler-Pricing-Strategy-Matrix-275x300.png 275w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Kotler-Pricing-Strategy-Matrix-768x839.png 768w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Kotler-Pricing-Strategy-Matrix.png 1251w\" sizes=\"auto, (max-width: 937px) 100vw, 937px\" \/><\/figure>\n\n\n\n<p>&nbsp;Here are some other options that may be worthwhile looking into.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Dynamic pricing strategies<\/strong>: Dynamic pricing follows market trends, user demand, and rates and adjusts the cost to the end customer to match. The aim here is to pick a profit margin percentage and alter costs to always stay just above that rate.&nbsp;<\/li>\n\n\n\n<li><strong>Penetration pricing strategies<\/strong>: Penetration pricing allows you to break into the market by offering your product at a much cheaper price than the competition. That might be through stunt pricing that lasts a short while, or, more commonly, via lengthy free trials.&nbsp;<\/li>\n\n\n\n<li><strong>Price skimming strategies<\/strong>: Here, you can set your price as high as you like on the assumption that a small number of early adopters will happily pay for your product. This allows you to slowly reduce the cost to the end user as more and more competitors emerge.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-so-which-product-pricing-strategy-is-the-best-nbsp\">So which product pricing strategy is the best?&nbsp;<\/h2>\n\n\n\n<p>We can\u2019t tell you that. There\u2019s no one-size-fits-all product pricing strategy. If there was, there\u2019d be no need for this article, as everyone would just use the same one. Now in most cases, some make more sense than others, with value-based pricing being the general favorite. However, you shouldn\u2019t just blindly follow that.&nbsp;<br><br>You see, the best pricing strategy depends on so many different factors and the unique quirks of your business. One strategy will be great for one company but absolutely suck for another.&nbsp;<br><br>So how do you find the best product pricing strategy for you? That my Product Manager friend, is a much better question. When deciding which strategy suits you best, you need to consider quite a few things to ensure it aligns with your needs. Here are some things to think about:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-your-business-goals\">Your business goals<\/h3>\n\n\n\n<p>What are your overall business goals? What do you want your product to achieve, in both the long and short term? If you\u2019re keen to quickly gain market share, then a strategy like penetration pricing may work best. If you\u2019re hoping to maximize profit over the long term, then a different strategy like skimming pricing would be better.&nbsp;<br><br>Your pricing strategy is also dictated by your brand positioning and where you want to sit in the market. If you\u2019re looking to be seen as a premium, luxury brand, you need a pricing strategy that reflects that.&nbsp;<br><br>Looking to better define your business goals? We\u2019ve got you covered with the ultimate collection of ready-made OKRs to boost your goal-setting. Download below \ud83d\udc47: <\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.prodpad.com\/downloads\/ultimate-collection-product-okr-examples\/\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"240\" src=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-1024x240.png\" alt=\"ProdPad's Ultimate Collection of Product OKR Examples\" class=\"wp-image-80932\" srcset=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-1024x240.png 1024w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-300x70.png 300w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-768x180.png 768w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-1536x360.png 1536w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/08\/Ulitmate-Collection-of-Product-OKRs_blogbanner-2048x480.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-your-market-and-competition\">Your market and competition<\/h3>\n\n\n\n<p>To nail the right product pricing strategy, you need a good grasp of your market demand. If you\u2019re in a highly competitive space with multiple alternatives for customers to go to, you\u2019ll benefit from a competition-based pricing strategy.&nbsp;<br><br>Now we did say that you don\u2019t just want to do what your competitors are doing, but it is good to research what they\u2019re charging and have that influence your decision-making. It can help ensure that you\u2019re charging alongside industry standards and allows you to decide if you want to match, exceed, or undercut these prices based on your value proposition.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-your-customers-nbsp\">Your customers&nbsp;<\/h3>\n\n\n\n<p>Your audience and the different segments that make up your user base and target market will massively dictate which pricing strategy is best for you. Different customer types have different needs and value different things. This means that they\u2019ll be willing to pay different prices for your services. This makes value-based pricing pretty effective as long as you deeply understand what each customer segment is willing to pay.&nbsp;<br><br>That said, if through customer research you learn that your users are sensitive to price changes, then other strategies may be better suited to you.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-your-cost-structure-nbsp\">Your cost structure&nbsp;<\/h3>\n\n\n\n<p>When choosing your product pricing strategy you should always have an eye on your costs, as you need to make sure your strategy covers your expenses and still delivers a profit. Depending on your costs, you may not be suited to economic pricing strategies as it may result in a lower profit.&nbsp;<br><br>To ensure you\u2019re factoring in cost, you can always choose a cost-plus pricing strategy, and build it by determining the minimum margin you need to sustain your business.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-your-competitive-advantage-nbsp\">Your competitive advantage&nbsp;<\/h3>\n\n\n\n<p>Got something unique about your product that your competitors can\u2019t match? That can open you up to value-based pricing, where you\u2019ll be able to charge a premium because your product blows your competitors out of the water. Having a Unique Selling Point (USP) gives you more freedom over your pricing strategy.&nbsp;<br><br>Plus, if you\u2019re an established business in your market with strong brand loyalty from your customers, you\u2019re in a much better position to sustain a premium pricing strategy over time.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-when-should-you-change-your-product-pricing-strategy-nbsp\">When should you change your product pricing strategy?&nbsp;<\/h2>\n\n\n\n<p>Here\u2019s the tea. Many Product Managers fall into the trap of not experimenting with their pricing often enough. It\u2019s been said by Patrick Campbell, a product pricing expert, that businesses only alter their prices every 3 years. He believes that this is too infrequent and that PMs should look at altering their prices every three to six months. The numbers back this up:<\/p>\n\n\n\n<div class=\"row is-style-default\">\n<div class=\"col is-style-emphasis\"><div class=\"col__style\">\n<p><strong>\u201cStudies have shown that 98% of SaaS businesses earned positive results from making core changes to their pricing policy.\u201d<\/strong><br><br>&#8211; <strong><a href=\"https:\/\/devsquad.com\/blog\/saas-statistics\" target=\"_blank\" rel=\"noreferrer noopener\">Phill Alves<\/a>, CEO of DevSquad<\/strong><\/p>\n<\/div><\/div>\n<\/div>\n\n\n\n<p>We get it. Changing your pricing often seems scary. But think about it this way. As a Product Manager, you\u2019re changing, updating, and innovating your product constantly. With new features and releases, you\u2019re always tinkering away at your product to make it the best it can be. Why not your pricing too?&nbsp;<br><br>Now before you take this to the extreme and start changing things drastically, the iterations don\u2019t have to be that big. Big changes can be disruptive. Say you\u2019re a customer on a tiered pricing model. You don\u2019t want to be dealing with prices that change with the seasons. Instead, you can look to make changes by introducing a new tier and get people to upgrade, or by introducing a related plan with a slightly higher value metric and price. This little-by-little approach to changing your product pricing strategies ensures that you\u2019re constantly evolving.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-if-i-don-t-want-to-change-my-product-pricing-strategy-that-often\">What if I don\u2019t want to change my product pricing strategy that often?<\/h3>\n\n\n\n<p>If you\u2019re still dead set against making regular changes to your pricing strategy, there are some signs that you should look out for that indicate that a pricing strategy switch-up should be on the cards. Of course, some of these are obvious.&nbsp;<br><br>If your bills and expenses start to increase, and your profit line starts to fall, then it\u2019s time to think about making changes. Keep an eye on <a href=\"https:\/\/www.prodpad.com\/glossary\/customer-churn\/\">customer churn<\/a> to see if customers are leaving because of misaligned prices. Plus, if you notice that your competitors are charging prices that don\u2019t align with yours, then you will need to update.&nbsp;<br><br>But a less obvious indication that your pricing strategy isn\u2019t working is when you\u2019re getting customers to sign up without any questions or pushback. Hold on. Are we really telling you that people buying your product no questions asked is a bad thing? Well, yeah.&nbsp;<br><br>See if your product is selling like hotcakes, and customers are gleefully accepting your pricing terms, it may be an indication that you\u2019re charging too little. Your value proposition may be hugely exceeding the price you\u2019re charging. This is potentially leaving money on the table.&nbsp;<br><br>Say you\u2019re a super popular band about to sell tickets for a world tour, and just 10 minutes after tickets got released, you sold out. On the surface, that looks awesome. But if you think about it, you could have made a lot more money if you sold the tickets for a bit more.<br><br>As a Product Manager, you want to find a pricing strategy where most people are still just about willing to pay for your product. Of course, you don\u2019t want to be in a situation where no one is buying and everyone is begging for a discount. However, having some pushback on your prices while maintaining consistent customer acquisition indicates that your prices are better than if you\u2019re selling them without issues.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-should-you-implement-new-product-pricing-strategies\">How should you implement new product pricing strategies?<\/h2>\n\n\n\n<p>A change in pricing can be difficult to oversee. You don\u2019t want to rush it and upset existing customers by suddenly changing things without them expecting it. You want to go about your business in a proper way. Here are a few things to keep in mind.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-communicate-the-change-effectively\">Communicate the change effectively<\/h3>\n\n\n\n<p>When changing your prices, you need to make sure that everyone knows what\u2019s up. Open up communication with your current customers so that they\u2019re fully aware of what you\u2019re doing. Don\u2019t apologize for a price change, but instead treat it as an opportunity. Offering a new tier to your product that\u2019s a bit more pricey? Let them know and make it sound too valuable to ignore. This transparency is key.&nbsp;<br><br>But also don\u2019t forget about internal communication. You definitely want Sales and Marketing Teams to be clued in so that they\u2019re not quoting old, outdated prices or models. Keep all stakeholders informed of changes and the rationale behind them.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-monitor-and-adjust\">Monitor and adjust<\/h3>\n\n\n\n<p>When you change your pricing strategy, don\u2019t feel like you have to stick it out if it\u2019s not working. You\u2019re free to tweak and revert if that\u2019s the best thing for your product. This flexibility will allow you to be agile and change your prices so that it\u2019s better for you and your customers. Track the performance of your product after the price change, looking out for things like <a href=\"https:\/\/www.prodpad.com\/glossary\/user-activation\/\">user activation<\/a>, to see if there\u2019s a dip you need to address.&nbsp;<br><br>Be sure to also monitor the KPIs you\u2019ve decided at the start of your product strategy, as this will make it clear if your product is maintaining success with the new prices. If you\u2019re struggling to decide KPIs for your product, we\u2019ve got a list of all the options to choose from that you can steal if needed. Download it below \u2935\ufe0f:&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.prodpad.com\/downloads\/product-management-kpis\/\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"240\" src=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/05\/Product-KPIs-Blog-banner-1280x300-2-1024x240.png\" alt=\"product metrics e-book\" class=\"wp-image-80602\" srcset=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/05\/Product-KPIs-Blog-banner-1280x300-2-1024x240.png 1024w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/05\/Product-KPIs-Blog-banner-1280x300-2-300x70.png 300w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/05\/Product-KPIs-Blog-banner-1280x300-2-768x180.png 768w, https:\/\/www.prodpad.com\/wp-content\/uploads\/2023\/05\/Product-KPIs-Blog-banner-1280x300-2.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-get-customer-feedback-nbsp\">Get customer feedback&nbsp;<\/h3>\n\n\n\n<p>When you change prices, be sure to maintain your <a href=\"https:\/\/www.prodpad.com\/glossary\/customer-feedback-loop\/\">customer feedback loop<\/a>, so that insight can be used to guide further changes and innovation. Actively seek the thoughts of your customers about the new pricing. Do they think it\u2019s fair? Do they like the new model that you\u2019ve adopted? This process ensures that you\u2019re making good changes for your users.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-prepare-for-pushback\">Prepare for pushback<\/h3>\n\n\n\n<p>A significant change to your product pricing strategies and model may result in some resistance from customers. If your strategy has made you go from a one-off payment to a subscription-based model, that change could be pretty jarring and cause dissatisfaction.&nbsp;<br><br>Make sure to have a plan in place to deal with these objections. You can sweeten the deal by offering discounts and promotions to ease customers into your new way of pricing.&nbsp;<br><br>But it\u2019s not just customers you need to think about. Your competitors may also react to your new product pricing strategy, so you\u2019ll want to keep a close eye on the market to see if they respond and change their tactics. This may force you to make further changes down the road to keep up.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-happens-if-you-get-your-product-pricing-strategy-wrong\">What happens if you get your product pricing strategy wrong?<\/h2>\n\n\n\n<p>We\u2019re not going to fearmonger and say that getting your product pricing strategy wrong is going to ruin your company. If you notice quickly enough that things are wrong, you can pivot and start to recover.&nbsp;<br><br>That said, there are some consequences that you want to avoid, which is why it\u2019s useful to inspect and monitor your pricing regularly so that you can tweak it when needed.&nbsp;<br><br>The biggest issue is that you leave money on the table. If your pricing is too low and people are snapping up your product, then you\u2019re missing out on more money that could have been made. On the flip side, if you go too far the other way, you may put customers off from buying from you.&nbsp;<br><br>Both of these situations can lead to a low profit margin, which can make things pretty dicey if not sorted out quickly.&nbsp;<br><br>Getting your product pricing wrong can also affect how the market views you. If you\u2019re using a product pricing strategy that undercuts your competitors and that is constantly running sales or discounts, you can dilute the value of your brand. Customers may start to see your product as low quality, even if it isn\u2019t. This forces you into a corner in terms of product positioning. No one is going to buy that it\u2019s a premium option if they\u2019ve already built up a conflicting perception in their head.&nbsp;<br><br>If you\u2019re keen to learn more about product positioning, we\u2019ve got an awesome on-demand webinar with the even more awesome April Dunford. She\u2019s a product positioning expert, so it\u2019s worth checking out the webinar below \u2198\ufe0f:&nbsp;<\/p>\n\n\n<div class=\"callout callout__inline-cta flex\">\n    <div class=\"callout__content\">\n        <p class=\"font-weight-bold\">[WEBINAR] The Secret to Product Positioning with April Dunford<\/p>\n    <\/div>\n    <div class=\"callout__cta btn-group\">\n        <a href=\"https:\/\/www.prodpad.com\/webinars\/product-positioning-with-april-dunford\/\" class=\"btn btn--cta\" rel=\"noopener\">Watch now<\/a>\n    <\/div>\n<\/div>\n\n\n\n\n<p>In summary, a poor pricing strategy is a missed opportunity. You\u2019ll be sacrificing potential income and giving up some customers to your competitors who would have loved your product. All this can harm you in the long run, so be confident to switch things up when needed.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-product-pricing-strategy-you-can-bank-on\">A product pricing strategy you can bank on<\/h2>\n\n\n\n<p>Choosing the right pricing strategy can feel like trying to hit a moving target. It\u2019s a mix of understanding your market, knowing your customers, and keeping an eye on your costs, all while trying to squeeze out a profit.&nbsp;<br><br>Whether you\u2019re using competitive based, value-based, or cost-plus pricing, the key is to keep experimenting and adjusting. After all, even the most seasoned Product Managers need to tweak their strategies to stay ahead. And speaking of staying ahead, why not use a tool that\u2019s as flexible as your pricing needs to be?&nbsp;<br><br>With ProdPad, you can manage your entire product roadmap in the <a href=\"https:\/\/www.prodpad.com\/blog\/convert-timeline-roadmap-to-now-next-later\/\">Now-Next-Later<\/a> framework, track customer feedback, and highlight recurring ideas to find out what you should be working on next. Why not take it for a test drive? Sign up for a free trial today and see how ProdPad can help you.<\/p>\n\n\n<div class=\"callout callout__inline-cta flex\">\n    <div class=\"callout__content\">\n        <p class=\"font-weight-bold\">Try ProdPad for free, no credit card needed.<\/p>\n    <\/div>\n    <div class=\"callout__cta btn-group\">\n        <a href=\"https:\/\/app.prodpad.com\/register\" class=\"btn btn--cta\" rel=\"noopener\">Start trial<\/a>\n    <\/div>\n<\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-\"><\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Choosing your product pricing strategies is a fine science. There\u2019s far more to it than throwing pricing models at a wall and seeing what sticks. There are a lot of&hellip;<\/p>\n","protected":false},"author":46,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[5231,10,9],"tags":[5295],"pp_uni_tag":[],"class_list":["post-82754","post","type-post","status-publish","format-standard","hentry","category-latest-blogs","category-product-leadership","category-product-management-best-practice","tag-pricing-strategies"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.4 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Product Pricing Strategies | ProdPad<\/title>\n<meta name=\"description\" content=\"Learn about the product pricing strategies that can support Product Managers to price their products correctly.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.prodpad.com\/blog\/product-pricing-strategies\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Product Pricing Strategies: Choosing the Right Approach for You | ProdPad\" \/>\n<meta property=\"og:description\" content=\"Learn about the product pricing strategies that can support Product Managers to price their products correctly.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.prodpad.com\/blog\/product-pricing-strategies\/\" \/>\n<meta property=\"og:site_name\" content=\"ProdPad\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ProdPad\/\" \/>\n<meta property=\"article:published_time\" content=\"2024-09-05T11:33:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-01-13T16:24:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.prodpad.com\/wp-content\/uploads\/2024\/09\/Product-Pricing-Strategies_-Choosing-the-Right-Approach-For-You-2-1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1020\" \/>\n\t<meta property=\"og:image:height\" content=\"550\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Domenic Edwards\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:description\" content=\"Getting your product management team structure right is such a *chef&#039;s kiss* moment. 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