How To Set The Most Competitive Price For Innovative Tech Products ✨
If your business is planning on launching an innovative product, chances are you will encounter dilemmas or difficulties in pricing. This is because how you price your product or service can largely influence your position in the market. In fact, setting your price point is arguably one of the most important decisions you will have to make when launching the product. In this article, we will be discussing how to set the most competitive price for your product launch.
How To Set The Most Competitive Price For Innovative Tech Products
Pricing anything is difficult enough, but even more so with new and innovative products. A large part of this difficulty comes from the fact that customers are not yet aware of the value of your product.
Many products, especially those in tech, are priced based on the customer’s perception of how much it is worth. In fact, some pricing strategies – such as value-based pricing – are built entirely around that concept.
Whether or not you adopt value-based pricing, perceived value plays a large role in the success of your strategy. Your business needs to understand how to maximise value and what pricing challenges you can expect. This will give you a better foundation for building your pricing strategy.
The general challenge in pricing lies in the attempt to find the goldilocks zone. In other words, the sweet spot. Pricing too low can erode your margins and raise questions about the quality of your product. Meanwhile, pricing too high can put off customers, causing them to turn away for cheaper alternatives.
Likewise, mispriced technologies – especially new ones – can disrupt perceptions, supply chains, and other infrastructures. For example, low priced breakthrough technologies can stunt profits for the entire industry and create highly sensitive and competitive environments. This leaves companies without any room to maximise profit margins.
However, many of these challenges and consequences can be avoided by properly understanding value.
Determining The Value Of Your Product
Determining the value of your product can be a complex task. We have broken down some of the process into more digestible sections that should be easier to follow. Take note that this process could stand to change depending on the unique factors affecting your business.
The first step is to allow a specific group of people to sample your product. This includes a narrow group of early adopters. These people are typically those who are forward-thinking and are interested in cutting edge technology. Because of their predisposed interest and understanding of tech, you can get more impactful feedback.
In conjunction with your sampling phase, you’ll want to conduct interviews with your customers. This evaluation is essential to getting the full range of insights from your customers.
At this point, it’s critical that you address any concerns around user-friendliness. One of the most common barriers to successful adoption is frustration and difficulties in learning how to use the new tech.
Refining Your Product
Now that you have open feedback channels for your new release, make the necessary tweaks to refine your product. During this stage, recognise which aspects of your product stand out the most to customers and utilise that to your advantage – especially when marketing.
After you have gone through the necessary steps to measure and test your products, you should have a general understanding of its value. At this point, you can figure out a pricing strategy that works best for your offering.
Depending on what your product is, some strategies will allow you to maximise profit more than others. It’s critical that you choose the best strategy for your business. A competent pricing team with specialised expertise can help you navigate this process.
Considerations Before Setting The Most Competitive Price
As you begin the process of pricing your new tech offering, there are several aspects that you’ll want to consider. These considerations will help you come up with a pricing strategy and revenue model that works for your business.
What and When Are You Pricing?
The first aspect for you to scrutinise is the structure of your pricing strategy. This consideration is especially important for new technologies which may not fit into previously used pricing models. What may have worked for you before may no longer be compatible.
The best example of this would be SaaS or Software-as-a-Service. Cloud-based software like Google Workspace or Dropbox would not have made a profit with a standard upfront payment. SaaS transitioned to a subscription-based pricing model which was significantly more successful.
In this situation, what changed was what was priced (formerly product, now service) and when payments are made (one time upfront to regular subscription).
What Is Your Relationship With Your Customers?
The relationship you have with your customers can have major implications for your pricing and revenue strategy. Depending on your offering, you can utilise the relationship your clients have with your business for profit.
For example, a customer that buys a pair of shoes or a jacket pays upfront in what’s known as an episodic relationship. However, for connected relationships, clients pay per use or amount of use. In this case, you would use a pay-as-you-go model.
Lastly, one aspect you may want to consider is value-adding. This is a common practice when you want to maximise margins that may otherwise be sensitive due to customer perception. By adding extra services or special features, you add perceived value to your offering.
Conclusion – Setting The Most Competitive Price
In summary, finding the most competitive price for your innovative tech involves a lot of analysis and strategising. However, as long as you follow a tried and tested process, you should be able to find the perfect price point and strategy for your product or service.
It’s important to scrutinise your structures and be willing to make major changes when old methods are no longer serving you. Lastly, if your business is struggling to come up with the perfect solution, consider hiring a pricing team. Pricing professionals have specialised knowledge that can help you find the best method for your business.
For a comprehensive view on driving pricing strategies to maximise growth,
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