How do you identify and exploit pricing opportunities and gaps in your market?

To identify pricing opportunities and gaps, start by understanding your value proposition. Determine the benefits and features most valued by your customers and how you differentiate from competitors. Assess your value proposition using tools like value maps, customer surveys, and interviews. This helps you see where you stand in the market, allowing you to identify areas where you can charge a premium or need to offer discounts.

So many factors to consider but the first question to ask is why ? Why us ? What sets us apart ? Do customers value that trait in us ? Will they pay us for that differential value ? How can I convince people to pay for that differentiated value proposition.

Understanding your value proposition is crucial not just for pricing, but for overall business strategy. It's the foundation for growth planning, and can directly impact your cash flow forecasts and net margins. By identifying what your customers value, you can align your offerings to their needs, thereby commanding a premium price or strategically offering discounts. This not only drives revenue but also helps in building a loyal customer base.

Too many businesses jump into pricing decisions without a solid foundation. This leads to missed opportunities and undervalued offerings. Before you can identify pricing gaps in your market, you need to have a crystal-clear understanding of the unique value you provide. Ask yourself: 1/ What problems do I solve for my customers that go beyond the features of my product/service? 2/ How do I outperform my competitors? 3/ Why should someone pay a premium for my offering? Once you've answered these, you're ready to dive deeper into market research and competitor pricing. Analyzing your value proposition is the essential first step towards pinpointing those untapped profit zones.

Analyzing your value proposition is essential to fine-tuning your pricing strategy. McKinsey & Company advises that understanding client priorities and differentiating factors allows for a more effective alignment of pricing with the perceived value, helping to address market opportunities and gaps. A well-defined value proposition reveals where you can command a premium or offer discounts. By clearly communicating your unique benefits and differentiators, you can better position your pricing strategy in the market.

Clearly outline what you aim to achieve with your pricing strategy. Objectives can vary from maximizing profit, revenue, market share, customer loyalty, or even social impact. Recognizing your constraints is equally important; internal factors like costs and production capacity or external factors such as competition, regulatory environment, and ethical considerations. Segment your market; different customer segments may value your product or service differently. By identifying these segments, you can tailor your pricing strategies to match their value perception. This could involve tiered pricing, volume discounts, or bundling products to cater to different needs and maximize revenue across segments.

Any pricing strategy needs to be accompanied by an expected sales projection. Whether it is penetration or skimming or neutral pricing strategy, business needs to align rest of the organization around fulfiling the expected demand. Once the demand estimates are set, it is important to track whether the estimates are matching the actual sales. In case there is a difference, leaders need to either (a) go the drawing board, to figure out what's going wrong, or (b) apply AI to figure out what changes need to be done to their pricing to continue to meet the sales projections. Automation is a key enabler here, and leading tools like BRIOAnalytics.ai are defining the new standards for how organizations need to track and refine their pricing.

The next step is to evaluate your pricing objectives and constraints. Define your goals, such as maximizing revenue, profit, market share, customer loyalty, or social impact. Measure and monitor your pricing performance against these goals. Consider internal and external factors that influence pricing decisions, like costs, demand, competition, regulations, and ethical standards. Use tools like SWOT analysis, break-even analysis, and price sensitivity analysis to align your pricing strategy with your business strategy and navigate potential challenges or trade-offs effectively.

Your pricing goals shouldn't be your goals or goals you came up in the yearly performance review exercise. You need to take the organization goals and translate them into 'pricing speak' i.e. translate them into actionable items from pricing point of view. If the org is trying to prioritize margin then we know the focus should be maximize margin and lower costs. If the focus is volume, then discounting is your friend. Once you have that strategic goal, then develop your KPI's. Make sure they are measurable and trackable. 'Fix pricing strategy' is not a KPI, 'Improve price acceptance to 90% of list price' is a goal. Setup your data for measurement. Make sure you are doing competitive pricing analysis via manual pulls or scraping.

Pricing isn't about hitting an arbitrary revenue target, it's a core component of your overall business strategy. B2B software companies need to think holistically - are you aiming for rapid market penetration, maximizing long-term profit, or disrupting the status quo? Your pricing objectives should align with those broader goals. Also, be brutally honest about constraints - whether it's technical debt, competitor landscape, or market maturity, these factors will shape your pricing decisions.

Ask any Starbucks customer about it's pricing. 9 out of 10 will say that it's prices are very high. However, 70% of such customers visit a Starbucks store at least 2 times in a week. Research certainly can be misleading. Henry Ford had famously quoted that if he had asked people what they wanted for better mobility, they would have asked for faster horse-carts & not the iconic Model T. Traditional pricing research techniques like VanwestenDorp, Gabor-Granger etc should be given a retirement. Instead companies can spend their research budgets on applying AI for identifying insights based on customer purchase, browsing, search & reviews, & analysing competition product. Focus on rapid experimentations needs to go up, to enable test & improve.

A great source of information about your market and customers is your sales team. They gather small bits of competitive information daily but sometimes don't assemble this information and pass it on to the pricing team. Having regular dialogue with them not only builds trust and stronger relationships but allows the pricing team to compile this data with other information collected, so that a more robust understanding of the market and customer base can occur.

Out with the generic market research, and in with the very specific pricing and price perception surveys. Being perceived as overpriced while actually being competitive, is a recipe for conceding market share, You want the opposite recipe. So its not just willingness to pay (wtp) that's important to know, equally important is to know the value perception - what about your offering is perceived over or under priced. For pure wtp discovery, a Gabor-Granger survey will do fine.

The third step is to research your market and customers. Analyze trends, customer needs, preferences, and willingness to pay. Understand how customers compare options and make decisions. Use tools like market research, customer segmentation, and conjoint analysis. This helps tailor your pricing strategy to meet specific market and customer segment demands.

Comprehensive market and customer research allows you to align your pricing strategy with the specific needs and behaviors of your target segments. This alignment not only enhances customer satisfaction but also maximizes revenue potential by optimizing prices according to what different segments value most. For instance, Nike uses detailed customer research to identify different consumer segments, from casual buyers to professional athletes, and adjusts its pricing and product offerings accordingly. This targeted approach enables Nike to maintain its brand appeal while effectively capturing value from different customer groups.

The fourth step is to choose your pricing method and tactics. Determine the optimal price level and structure using methods like cost-based, value-based, or competition-based pricing. Consider tactics like dynamic pricing or price discrimination to adapt prices over time and across different situations. Implement and communicate your prices effectively, ensuring alignment with your value proposition, objectives, and market understanding. This approach helps set and adjust prices strategically to maximize value and competitiveness.

In software-as-a-service (SaaS), its worth disambiguating Pricing Metrics (E.g. price per user versus price per contact) from a Price Setting philosophy (e.g. $5/user versus $10/user). Strategies like competition-based pricing and value-based pricing address the latter, but not the former. Figuring out your Pricing Metrics is likely the first step. *Every* Pricing Metric creates friction that you must be aware of. If you pick price per seat, hesitancy to invite team members (& incentivizes license sharing). If you pick price per contact as a CRM, top of funnel workflows with higher volumes of contacts happen outside of your product. So there is no frictionless Pricing metric, you must choose.

Hands down the biggest missed opportunity for subscription products is how they price annual plans. If you have a product that retains users for under 12 months, you should look at the LTV of your monthly users and price your annual plan to be 1-2 months more than that. The discount will drive more users into the longer plans, which will retain better due to fewer payment processing problems.

Not only is it important to consider the best approach in priding for your business you also need to continuously monitor changes in costs, customer demand, competitive actions, and the overall market environment. This ongoing analysis helps in identifying the right times to adjust prices and could mean first mover advantage. Best practice in implementing and communicating prices entails focusing on value while being transparent, consistent and seeking feedback to maintain customer trust and loyalty.

You can choose your weapon of choice. But more important than the method is the framework of what you are choosing, why, how will you measure success, and how will you pivot and improvise when necessary. The best weapon will depend on several factors like what product, what industry, what value, what goal etc. Selling on value or using value based is always prefferred,

With advances in automation and data engineering, it has become possible to monitor, test and refine your pricing strategy at close to real time. Any pricing strategy needs to be translated to an expected sales projection. AI comes handy here. Once the sales estimates are set, it is important to track whether they are matching the actual sales. In case there is a difference AI can be applied to figure out what changes need to be done to their pricing to continue to meet the sales projections. Automation is a key enabler here, and leading tools like BRIOAnalytics.ai are defining the new standards for how organizations need to monitor, test, track and refine their pricing strategy.

The final step is to monitor and test pricing strategy. This involves tracking and evaluating the impact of your pricing, collecting and analyzing feedback and data from customers and competitors, and identifying any issues or gaps. We should experiment and innovate with our pricing to uncover new opportunities and enhance performance. Utilizing tools like price tracking, testing, optimization, and experimentation can help you measure and refine your pricing effectiveness and efficiency.

Monitoring, tracking, and testing. All needs to be done in sync. Easy-to-use dashboards are great for analyzing your data. My know-how about the pricing industry made me realize that finding gaps is critical. While monitoring, you have to keep tracking real-time competitor data because the market is super crowded and competitive. Dynamics are changing instantly. The industry knows monitoring and testing the pricing strategies is essential and is tired of doing it manually. Don't hesitate to use tools and automation.

1. Monitor your market (track competitor prices and industry trends) and analyze customer behavior (buying patterns, price sensitivity). Tools like price trackers and customer surveys can help. 2. Identify gaps in the market where your product/service can be priced differently to fill a need. This could be a niche with a higher willingness to pay or a price point not currently served by competitors. 3. Run A/B tests with different pricing to see what resonates with customers and maximizes profits; if you are in the pre-launch stage use fake door tests. Test it with the sales team. You can also use ranking surveys, max-diff surveys, or conjoint analysis to validate your hypotheses - it requires more resources but ensures accuracy.

It can be the best insight, but if it is not translated into action, it will be worthless. There are a lot of excellent contributions about the role of listening to sales forces, doing ranking surveys … but the issue in some companies is translating it into action. To bridge the gap, perhaps incorporate a ‘Pricing Strategy Check’ in the yearly business review. It will prompt teams to systematically discuss the actions taken to test the continued validity of our pricing approach and what was done to uncover new market pricing opportunities. In companies where the translation is not working, this check forces a management discussion and therefore action. And for the others, a recognition for the good pro-active teamwork.

Agree with above. Doing so however requires extensive time and resources especially when dealing with broad porfolios and geo scopes. ?? Read with caution Ontop of the above, a very quick price diagnostics could include: - Market shares (MS) by product / country - Win rates by product / country - Price point standard deviation by product country - Accessorials Very highly level you can assume there to be pricing opportunities in high MS, high Win rate or high price point standard deviation product / country pairs. Moreover usually accessories have a lower elasticity vs the product. ?? Always very dangerous to take a numbers only approach. Make sure you at least have an ideas of why numbers look like that, and get leadership POV.

More and more consumers prioritize ethical and eco-conscious brands. They're willing to pay a premium for products and services that align with their values. Here's how sustainability factors into your pricing strategy: 1/Analyze Your Audience: Is your target market environmentally conscious? Research their willingness to pay for sustainable options. 2/Differentiate: Highlight your sustainable practices. This sets you apart from competitors who prioritize lower prices at any cost. 3/ Quantify Value: Can you measure the eco-impact of your product vs. less sustainable alternatives? Put a number to that value! 4/ Messaging Matters: Weave sustainability into your brand story and product descriptions to justify that premium price point.

I’ve learned that identifying and exploiting pricing opportunities and market gaps requires a comprehensive approach. It starts with a deep understanding of our value proposition and evaluating our pricing objectives and constraints to remain competitive and profitable. Market and customer research is crucial for tailoring our pricing strategies effectively. By continuously monitoring and testing our strategies, we stay agile and adapt to market shifts. This proactive, data-driven approach ensures sustained growth and allows us to capitalize on emerging opportunities, driving overall business success.

To monitor the pricing strategy, we can use price tracking tools to compare prices against competitors in real time. For instance, if a competitor lowers their price, we can quickly adjust yours to stay competitive. We can also conduct A/B testing with different price points to see which generates more sales. Analyzing customer feedback might reveal that a certain price point is too high, prompting a reevaluation of your pricing model.