Product PricingCase Study

By

Aditya Bhelande, Founder & CEO Yukta

Goals of Pricing Exercise

• Here are some of the goals to be achieved by performing Pricing analysis:• Understand competitive landscape

• Pricing• Features• Customers

• Understand if there's any money left on the table• If yes, then how much?• What's the room for improvement

• Identify if there are any data collection issues required for changing pricing

• Understand if we are charging Customers in line with value we are providing them

• Customer distribution by• Geo,• Vertical• Product Feature usage, etc

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Product Pricing Process

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Product Buying Process / Experience

• High touch v/s low touch

• Commitment size (small v/s large)

• Commitment duration

• Engagement process (Website, email, phone calls, etc)

• Sales Cycle duration and introduction of payment conversation in the process

• Purchase approval needs4

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Prospect Profile

• Customer Buying Profiles:

• The Bargain Hunters - Price drive

• The Savvy Buyers – Focused on value generated from functionality provided by the product / service

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• Competitive Comparison

• When and how do prospects compare price with the competition?

• Does it happen only during the initial purchase or also during the repeat purchase?

• Are there enough payment options compared to customer offerings?

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Competitive Pricing Analysis

Competitive Pricing Analysis

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Competitive Pricing Analysis

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Competitive Pricing Analysis - Conclusions

• Feature parity as compared to the competition (Basic / Core & Advanced)

• Typical product giveaway (baseline must have for free or at minimal price)

• Solution completeness compared to the competition

• New competitor entrants rate

• Presentation and positioning of pricing by the competition9

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Risks Associated with Current Pricing • Too much reliance on sales of certain product / product

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• Too expensive compared to competition (especially when customer needs are very basic)

• Pricing related issues with online transactions

• Revenue Generation by Geo

• Cap on product purchase10

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Risks Associated with Current Pricing • Cap on product purchase

• Under valuing key features, especially differentiators

• Customer distribution by geographies & verticals

• Pricing model using attributes that are not directly related to product usage

• Lack of data on product usage

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Other Product Pricing Considerations

• Product vision ad growth plan

• New market acquisition

• New product introduction

• Product profitability pressures

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Pricing Sweet Spot

• In which scenarios we most likely to win business?

• Niche

• Beachhead

• Customer referrals

• Low barrier to entry markets

• In which scenarios we most likely to loose business?

• Most profitable and least profitable scenarios

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