What are effective ways to validate your product vision with different pricing strategies?
Learn from the community’s knowledge. Experts are adding insights into this AI-powered collaborative article, and you could too.
This is a new type of article that we started with the help of AI, and experts are taking it forward by sharing their thoughts directly into each section.
If you’d like to contribute, request an invite by liking or reacting to this article. Learn more
— The LinkedIn Team
As a product marketer, you have a product vision that guides your strategy and decisions. But how do you know if your vision is aligned with your customers' needs and expectations? How do you test if your pricing model is appropriate and attractive for your target market? In this article, we will explore some effective ways to validate your product vision with different pricing strategies, using various methods and tools.
Before you can validate your product vision, you need to define your value proposition. This is the statement that describes how your product solves a problem, delivers a benefit, or satisfies a need for your customers. It also explains why your product is different and better than the alternatives. Your value proposition should be clear, concise, and compelling, and it should answer the question: why should someone buy your product? You can use frameworks like the value proposition canvas or the lean canvas to help you craft your value proposition.
-
debbie mukherjee
Global Product/Brand Strategist
Know your product category, your customers, your market, and your competition, and do regular price elasticity testing. And never lose sight of the product vision/strategy.
-
Kineret Muller
Director, Global Marketing & BizDev
When marketing a B2B enterprise solution, I've found that these solid steps are an effective way to validate product vision: 1) Analyze industry reports, case studies. This is easily and publicly available data. 2) Conduct an in-depth internal analysis of your product / service / company's unique value proposition or SWOT. Interview key stakeholders and access available information within the company. Good luck!
-
Dr. Sheikh Muhammad Tanweer
MBBS, (MD), MBA, CRCP - Sales / Training / Marketing / Regulatory / Dy GM AJM / X Novartis / X Sanofi
I can share an example from my past 24 years experience in Pharma Industry. Once I need to launch a generic of an anti-diabetic drug (Glimepride) which was already in the market. I conducted surveys at prescribers (Research) and explore their need through questionnaire. I found that doctors felt difficulty in recognizing the strength of Glimepride from colors of tablets when patient show them from their pocket. It was a norm in General Practice by Primary Physician. I requested manufacturing plant team to print the strength of Glimepride at sides of blister in such a way that doctor can read the strength even if patient show them one tablet. That's how my product solved a problem, delivered a benefit, or satisfies a need for my customers.
(edited)
Next, you need to identify your customer segments, or the groups of people who share similar characteristics, needs, and behaviors related to your product. You can use tools like the empathy map or the persona template to create profiles of your ideal customers, based on your research and assumptions. You should also define the criteria that make a customer segment viable, such as the size, accessibility, profitability, and growth potential of the market.
-
Jason M. Bobay
President at Recovery Force Health
This is the part where most people/companies screw up. Trying to be everything to everyone dilutes your offering. It's ok to start with smaller segments that are passionate about your offering. A core foundation customer segment will give you the confidence, data, and know-how to broaden to other adjacent segments.
-
Beverly Wilks
Senior Manager, Marketing @ Bell | Full-stack marketer | Passionate about leveraging technology to build brands & drive customer engagement.
This is where product marketeers could go deeper than demographics, psychographics. By including sub-segments, ie: industries/verticals to gain more insights into the customer need as it related to the vertical. This insight can help tailor the product marketing strategy. When identifying customer segments, also include sales, product management, customer service, delivery and actual customers - having these different perspectives will help to inform and shape the messaging and ensure that the output is impactful and relevant to the target audience.
-
Maxim Tsarev
Helping startups find the #Product-Market fit faster
Effective product vision validation with pricing strategies requires deep market analysis and an understanding of consumer psychology. A tiered pricing strategy can help identify which features your customers value the most by analyzing uptake at different price points. This not only confirms product-market fit but also highlights potential areas for development and premium offerings.
Then, you need to choose your pricing strategy, or the way you set and communicate the price of your product. Your pricing strategy should reflect your value proposition, your customer segments, and your business goals. There are different types of pricing strategies, such as cost-based, value-based, competition-based, or penetration-based. You should consider the pros and cons of each option, and how they affect your positioning, differentiation, and profitability.
-
Katya Hansom
💼 Senior Product Manager 🤓 Product nerd 🤖 Tech geek 🔭 Astrophysics enthusiast
Biggest lesson learnt: make your pricing easy to understand. One of our products went through an evolution of pricing models with variations of freemium, tiered licensing and pay as you go models. Changing the pricing that often resulted in difficulty of predicting the ROI and complexity in explaining the value for money to prospects. It is ok to change and adapt your pricing model, but you need to do so with empirical knowledge and clear metrics.
-
Aastha D.
Offer a limited-time pilot program with different pricing options to a select group of customers. Collect feedback and usage data to determine which pricing strategy is the most appealing and profitable.
-
Gregor Stalinski
Senior Advisor
Do not link your pricing strategy to your cost. There is always someone who has a lower cost. Value-based model is the one to go for. You provide a solution to a problem or risk management. Find our how much is it worth for your customer. You may be surprised.
Now, you are ready to validate your product vision, or test if your assumptions about your product, your customers, and your market are true. You can use various methods and tools to collect feedback and data from your potential customers, such as surveys, interviews, landing pages, prototypes, or beta tests. You should design your validation experiments with clear objectives, hypotheses, and metrics, and use them to measure the demand, desirability, and feasibility of your product.
-
Maxim Tsarev
Helping startups find the #Product-Market fit faster
Incorporate continuous customer feedback into your pricing strategy. Establish feedback loops through social media, direct customer outreach, or beta testing with variable pricing. This customer-centric approach allows for iterative adjustments, ensuring that the pricing strategy evolves in tandem with both the product vision and the customer's needs.
-
Giliola Ignat
Senior Director| EMBA| Customer Experience | Driving Digital Transformation and Growth for Insurance Companies| Marketing and Strategy Expert| Global Experience with a Focus on Streamlining Operations
A traditional approach to validating your product vision with different pricing strategies would be to conduct controlled A/B testing. This method involves segmenting your potential customer base into groups and presenting each group with a different pricing strategy. Monitor their responses and measure key metrics such as conversion rates, revenue, and customer feedback. This approach allows a systematic and data-driven analysis of which pricing strategy resonates most with your audience.
-
Katya Hansom
💼 Senior Product Manager 🤓 Product nerd 🤖 Tech geek 🔭 Astrophysics enthusiast
The key learning is that you do not do this once. Continuous product discovery instead offers a unique and manageable opportunity to product managers to adapt and iterate their vision to better match the ever changing and evolving customer needs.
Finally, you need to validate your pricing strategy, or test if your price matches your value proposition and your customer segments. You can use different methods and tools to collect feedback and data from your potential customers, such as price sensitivity tests, willingness to pay tests, price comparison tests, or split tests. You should design your validation experiments with clear objectives, hypotheses, and metrics, and use them to measure the perceived value, affordability, and elasticity of your price.
-
Maxim Tsarev
Helping startups find the #Product-Market fit faster
Leverage A/B testing for real-world validation of your product vision. Offer your product at different price points to segmented groups within your target market. Monitor the performance, feedback, and conversion rates for each group. This data-driven approach provides tangible evidence on pricing elasticity and customer value perception, aligning closely with the product vision.
-
Katya Hansom
💼 Senior Product Manager 🤓 Product nerd 🤖 Tech geek 🔭 Astrophysics enthusiast
For most of our products the one metric that matters is the retention expansion. It requires us to have access to consolidated financial and maintainable costs data, which was historically in various disconnected systems and spreadsheets. Transforming our data and rolling out a data lake initiative ended up being a necessity to allow us to quantitatively compare the impact of different pricing models. It is not an easy journey and the finance team hated us in the beginning.
-
Mardien Drew
Building digital products for tech/data-led businesses that SELL | From vision to launch to $$$| Generated $310K in new revenue within 6 weeks
Make sure to do competitive analyses. How is your competition pricing their offer? Is it a subscription model? Do they offer free options? What is a common way of pricing in your industry/your niche? What are their prices? What features are included in that? What will customers get buying your product instead of the competitors? For example, your highest tier licence fee include free data api. The competition doesn't include this. This can make you more competitive.
The validation process is not a one-time event, but a continuous cycle of learning and improvement. You should analyze the results of your validation experiments, and use them to refine your product vision and your pricing strategy. You should also keep track of the changes and trends in your market and customer segments, and adapt your product and price accordingly. By validating your product vision and your pricing strategy, you can increase your chances of creating a product that your customers love and are willing to pay for.
-
Jason M. Bobay
President at Recovery Force Health
Iteration is the key to innovation. Prototype, Test, Gather Feedback, Iterate. Repeat. Foundational product development and voice of the customer work. Utilize the data on the feedback portion to decipher if it is time to launch or to conduct the next iteration. If you are 80% there it might be a good time to launch. Remember, perfect is the enemy of good enough! You will have time to learn after launch and iterate the next version with data.
-
Beverly Wilks
Senior Manager, Marketing @ Bell | Full-stack marketer | Passionate about leveraging technology to build brands & drive customer engagement.
Experimentation is essential. Iterate, get feedback and then pivot. A few weeks after, do it again. The more iteration the more data you will learn about the customer and how the are using/interacting with your product.
-
Gad Alon
Data & Analytics, Growth Marketing, Product Management @ Chewy | ex-Facebook, Google, Bain & Company
Start with customer interviews to understand pain points and willingness to pay. Test pricing tiers through landing pages. Observe behavior and run A/B tests. Adapt based on data - raise prices if demand is high, lower if conversion drops. Also - consider tiers, bundles, subscriptions, freemiums.
(edited)
-
Maxim Tsarev
Helping startups find the #Product-Market fit faster
Look at how competitors are pricing similar offerings and analyze their market positioning. Validate your product vision by benchmarking against these competitors, but also differentiate by adding unique value that justifies any deviation from the established price range. This strategy supports a vision that stands out in the market while still being rooted in industry reality
-
Zubin Teherani
Convert families into superfans through youth sports marketing
Pricing can be scary. What if your pricing increase makes your existing clients leave for your competitor? What happens if it makes your new business sales plummet? This is why it's important to really understand your market, your customer, and your product. If you're having hesitations, do your homework until you feel confident using the strategies above. If you're not able to find that confidence, then maybe reevaluate whether a pricing change is the best next step.
(edited) -
Lewis E. Farrell
Sr. Marketing Consultant - AI - AGI - Blockchain / Crypto / FinTech at SingularityNET
Also talk to Product Management and get them to determine your COG so you don’t price the product such that what you make up in volume you’ll lose on revenue 😂