Unlocking the Power of Pricing: What Every Product Manager Needs to Know

Imagine you’re on the bridge of a ship, charting a course through uncertain seas. As the Product Manager (PM), you’re not just steering the ship—you’re determining its destination and the value of the cargo it carries. But here’s the twist: the price you put on that cargo determines whether your ship even leaves the dock.

Welcome to the world of pricing strategy!

If you tuned into Product Bulb 's podcast episode "Pricing Strategies for AI Products", you would see that we dove deep into the topic of synergy between product and pricing. Today, I want to build on that conversation, peeling back the layers of pricing strategy and showing how the role of the PM is central to driving this powerful machine.

Let’s start by breaking down why pricing is much more than just a number.

Pricing Strategy: The Compass that Guides Value

Pricing isn’t just about slapping a number on your product—it’s a strategic tool. Picture your product as a treasure chest. What you place inside (features, user experience, reliability) makes it valuable, but the price tag you attach determines how much people are willing to pay to unlock it.

Here's the magic: your price communicates your product’s worth before a customer even experiences it. Too low, and people may undervalue your offering, questioning its quality. Too high, and they might see it as inaccessible or mismatched with its true value.

And, this is where the PM comes in.

The PM’s Role: Conductor of Product and Pricing Harmony

As a PM, one is the conductor of a symphony that includes not just the product features, but the pricing, packaging, and customer journey. Their goal is to create harmony. Pricing is like the crescendo in this symphony—it needs to hit just right for the performance to be a success.

I once worked on a product launch where the team initially thought the most critical factor was to maximize features, making the product the “best” in its category. But here’s what we learned: the most feature-rich product doesn’t always win. What does win? The product which is priced appropriately for the value it provides. So, we adjusted pricing to reflect perceived value rather than sheer feature count, and it transformed our sales trajectory.

That’s the PM’s real task—to help pricing strategists translate the product’s essence into a price that reflects its worth, aligns with the market, and entices customers to take action.

Finding Synergy: Why Pricing and Product Go Hand in Hand

When people talk about product and pricing as separate functions, I always tell them, “That’s like saying the heart and the lungs don’t need each other.” They do, and together, they make the whole system work.

Take a scenario I’ve seen time and again: a product is well-built, with a brilliant feature set, but it's priced too high for the target market. The result? Customers walk away, not because the product lacks value, but because the price is out of alignment with expectations.

Now, let’s flip the script—imagine a product priced too low. You’ve just left money on the table, undervaluing the hard work that went into crafting that product.

So, how do you find that sweet spot where product meets pricing? Here’s where synergy comes into play.

A few high level guiding principles:

1. Know Your Customer Persona: Don’t just think about your product in a vacuum. Understand who your customer is. What are they willing to pay for? What pain points are you solving? A great PM knows their customer inside and out, and this informs everything from feature prioritization to price setting.
2. Price Based on Perceived Value, Not Just Cost: It’s easy to get stuck pricing based on what the product costs to make. But successful pricing is driven by perceived value—how much is it worth to your customer? What are they getting out of it? How is the value scaling?
3. Iterate and Test: Pricing is not static. Treat it like an evolving feature. Run A/B tests, gather feedback, and be willing to make adjustments. I’ve seen successful companies go from stagnation to high growth simply by recalibrating pricing strategies.

Product Managers: Become the Pricing Visionary

Think of pricing as your product's narrative. As the PM, you’re telling a story, and the price is the conclusion—the final element that wraps up everything you’ve promised.

Here’s a story from a project that taught me this first-hand: we were launching a new service offering, and the team was debating the price point. Some argued for a premium price because of the high cost of innovation, while others wanted to go low to undercut competitors. But the real breakthrough came when we looked at the value through the eyes of our customers.

Based on customer research, we set a mid-tier price that matched the perceived impact of the solution—an aspirational, but accessible price point. The results? We hit our revenue goals within the first quarter.

You, too, can become the pricing visionary for your team. It’s about having the courage to challenge assumptions and the insight to align your pricing strategy with what the market craves.

The Final Word: Pricing Is Your Secret Weapon

At the end of the day, a great product without the right pricing strategy is like a ship without a compass—it might sail, but it won’t reach its destination. As PMs, you have the unique power to set that compass and guide your product to success.

So, what are you waiting for? Dive into the data, listen to your customers, and find that sweet spot where pricing and product work together seamlessly. If you do, you’ll unlock not just revenue, but customer loyalty, brand strength, and long-term growth.

In the same spirit of our podcast, remember: the most successful PMs are those who understand that pricing isn’t a one-time decision—it’s a dynamic process that evolves with your product and your market. Keep experimenting, keep learning, and keep pushing the boundaries of what your product can achieve.

Thank you for reading my thoughts. I would love to hear your perspective, so let's continue to take this discussion forward in the comment section ????