You’re developing a pricing strategy. What’s the best way to ensure you don’t undervalue your product?

Knowing your value proposition is so important for differentiating yourself in a crowded space. If you have a good understanding of both the value proposition and the industry/sector you are working in, then it creates an opportunity for you to shift the mindset of the customer. Knowing, not only who you are up against, but the reasons why your product/service can be separated from that of your competition, creates a more compelling reason for someone to partner with you. Beyond doing your due diligence, it adds value to the discussion, by leaving price as the last hurdle to overcome as a possible objection, or ideally the price becomes a non factor and leads to a quicker sales cycle.

Understanding your value proposition is critical, particularly in the software development industry where differentiation can be subtle yet significant. As a Business Development Manager with a computer science background, I've seen firsthand how aligning your product's unique features with the specific needs and pain points of your customers can create a compelling reason for them to choose your solution over others. It's not just about the technology; it's about how that technology solves problems in a way that no other product does.

Highlight Unique Selling Points: Identify and emphasize the unique selling points of your product that set it apart from competitors. Whether it's superior quality, innovative features, or exceptional customer service, these factors contribute to the perceived value of your offering and justify a higher price.

Analyse the market prices / offer. and try to do better. for instance you are opening a new area and you know that your competitors are high with margins? try to offer more and see same margins or reduce it a little in certain conditions . for instance in STR industry you can offer reduced commissions in front of 3 years exclusive contract ; they are all asking a management fee? put it included; your competitors are using the same old formula to give public prices to owners instead their real earning ( +- dynamic prices) ? work on net ( if you learn how to do it , it's even better for your scaling).

Making your value proposition understandable for others is critical, specially if it is a brand new product/service in the market. You can only understand the value of your product if you do the SWOT analysis a benchmark it in the actual market. Create and highlight the USPs (unique selling points) so your customers or partners may promote it easier as well on their own markets, if you export the product.

Cost Analysis: Start by conducting a comprehensive analysis of all costs associated with producing, marketing, and selling your product. This includes direct costs such as materials, labor, and manufacturing overhead, as well as indirect costs like marketing expenses, distribution costs, and overhead.

Understanding your costs and margins is crucial for pricing, but it's equally important to recognize the value you offer. When estimating costs, consider the entire lifecycle of your product or service, including after-sale support and potential returns. Margins should reflect not only your financial goals but also the perceived value to the customer, which can allow for premium pricing strategies in cases where your product or service offers unique benefits or solves problems more effectively than competitors.

Conduct a thorough cost analysis to determine all expenses associated with producing and delivering the product. Factor in direct costs such as materials, labor, and overhead, as well as indirect costs like marketing and distribution. Don't forget to consider the value proposition of your product and its differentiation from competitors as well.

working in STR industry, margins are really tights. You must list all your costs and knowing very well that some bookings it's even better not to take . for instance one night only booking is a loss of money at least you sell it as per 3 nights! you need to consider not only the obvious costs ( office rental, cars, employees, bills, welcome kit, photographer etc) but as well the hidden costs ( how much it costs every booking in terms of person that answer to guests question, payments processing, etc) .. If you work on different the of property , differentiate margins is mandatory. ti do that you need a good software. this is an other point, there are great softwares but choose the most compete one, just to avoid to increase costs

Have a real idea of your costs and margins is crutial to see if your product is inline with the other competitors or not. Also it is very important to define this at an initial stage, if you export, because there will be some countries or regions you will need to adjust your pricing according to local market specifications (more price sensitive, abundance of local suppliers of similar products..etc)

Understanding your market and customers is crucial for effective pricing. The willingness to pay is not static; it's influenced by perceived value, which can be shaped by branding and customer experience. Competitive pricing intelligence should be dynamic, reflecting real-time market changes. Employing a blend of qualitative and quantitative research methods will yield a comprehensive view of the market landscape, enabling you to price products in a way that balances profitability with customer satisfaction and competitive positioning.

If you are going to open a new market, before doing so check prices, competitors, the potential. You can usually find everything online (there are websites that compare prices for you). Working in STR, for example, you can check the prices on Otas and online on social media groups, you will find how much their commission is, so it is easy to see if that market is feasible for you or not. Or if you want to open a new market, check with the local tourist board which nationalities go there. If the first nationality is Germany, are you sure you have the best Ota/marketing for that market?

Also consider what additional value your product has that’s unique / distinctive from your competitors Ideally you want to establish what your competitors product is lacking and what you can do to solve this need of your customers

Also consider what additional value your product has that’s unique / distinctive from your competitors Ideally you want to establish what your competitors product is lacking and what you can do to solve this need of your customers

Deep market analysis, as well as the customers′ demand and values is an important step prior you even decide to launch your project. It is important to understand, what are the market conditions, who are your competitors and how they behave. Also, do not underestimate the factor of "loyalty-level" of your customers and add those risks to your business strategy. Making failures in the preparation phase will then cost you a lot of money in case of pushing back from the market.

Understanding your value proposition is crucial as it dictates how much customers are willing to pay for the unique benefits your product offers. When estimating costs and margins, it's essential to include both direct and indirect expenses to ensure profitability. Market research should inform your pricing method, as customers' perceived value and competitor pricing can significantly impact your product's success. Dynamic pricing can be particularly effective in industries with fluctuating demand. Lastly, your pricing strategy should be flexible, allowing for adjustments based on market feedback and changing conditions.

Pricing method is one of the essential tasks of the business development team. The price is an important factor for the economical feasibility of the company, however, relying on the price in your business strategy is extremely dangerous. Allowing yourself to win the projects throught the price only is a dangerous approach, as there will always be someone, who will sustain with less money. What is even worse - there are even companies who will sustain with loss for some time. To make a long story short - accessing the market vie price is a dangerous strategy and rarely has a long-term success.

If you have a distinct advantage over the other players in the market it’s worth asking a little more than the competition, however you must be sure that your perspective customers can clearly understand the benefits of your offer.

If you have a distinct advantage over the other players in the market it’s worth asking a little more than the competition, however you must be sure that your perspective customers can clearly understand the benefits of your offer.

Absolutely true. Your pricing should not be fixed as it may have to change accordingly to market reaction. Competition analysis is very important but also your customers or partners feedback is also crutial. With their feedback you can better adjust your pricing to meet local market requirements and specifications. Be wise, flexible and open minded at all times.