Pricing Gem: Triage your product features from the outset

When you create your product offer it's easy to become confused or overwhelmed with the features and benefits of each potential product or bundle. But if you get confused, think about your poor customer.

So go at it with two clear concepts in mind:

Concept one:

Split the features of your product offer into three: those that ‘wow’, those that are there to make up the numbers, and those that really put people off. Let’s call them ‘champions’, ‘also-rans’ and ‘losers’.

It is well proven that the most important of this triumvirate are the losers, nobody wants to pay more for something they don’t value.?How can you tell which are losers? Well, if a product or bundle feature is valued by less than 25% of your target market and not valued at all by more than 25%, then it’s a definite loser. At the very least you should never mention it, at best you should get rid of it – and if it costs money to provide then definitely ditch it!

It’s important to recognise customer segmentation in this. An air-conditioned room in a hotel in Dubai is an absolute must and a champion feature, in Iceland it’s the ultimate loser.

Keep a close eye on the also-rans too, those features that fill up space, cost money, add complexity and confuse the marketing message. It’s a ratio game – never have more also ran features than champions. How can you tell an also ran? Less than 50% of your customer segment value it.

So simply put, if less than 50% value it then it’s an also-ran, if less than 25% it is a loser.

Concept two:

It’s that old favourite: good, better, best.

The choice of three definitely works, but to optimise your profit you need to make sure that less than 20% of your customers will choose the ‘good’ option. You are aiming to sell ‘better’ or ‘best’ every time. That marvellous ‘best’ purchaser should exceed 10% of your customer mix.

Pricing gem:

Before you go granular on product features, triage them using the two key concepts: champions versus losers and the old favourite, good, better, best. It’s all about the ratios.

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