What’s the ideal frequency for tweaking your product’s pricing and offering? 🤷♂️
I hear people scared about “playing too often with pricing”, and others who see there an opportunity. Well, you’re all right!
The right frequency largely hinges on the specific elements of pricing you’re looking to adjust. Here’s a breakdown:
✔ 𝐏𝐫𝐢𝐜𝐞 𝐏𝐨𝐢𝐧𝐭𝐬 📈: Adjusting your price points, can happen as often as every second, as in Dynamic pricing. It can be a real-time dance with market demand, aligning with short-term market trends, promotions, or even changes in supply and demand. Flexibility is key here.
✔𝐅𝐞𝐧𝐜𝐞𝐬 (𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐬 𝐖𝐢𝐭𝐡𝐢𝐧 𝐏𝐥𝐚𝐧𝐬) 🧰: Fine-tuning features within pricing plans, adding, removing, and shuffling individual features between plans can happen at quarterly to yearly intervals. It allows product and pricing teams to wisely play with customer take rates and avoid cannibalization between plans.
✔𝐏𝐫𝐢𝐜𝐞 𝐎𝐟𝐟𝐞𝐫𝐢𝐧𝐠 (𝐏𝐥𝐚𝐧𝐬) 💼: Adjusting your pricing plans, by creating new plans is usually something happening in yearly to multi-year cycles. This is a step that requires deeper consideration and has deep impacts on existing customers, billing, and migrations. Keep these updates more strategic and well-communicated.
✔𝐏𝐫𝐢𝐜𝐢𝐧𝐠 𝐕𝐚𝐥𝐮𝐞 𝐌𝐞𝐭𝐫𝐢𝐜 📊: Altering the underlying metric that you base your pricing on (e.g., per user to per usage) is a transformational step. This might occur over a span of time ranging from a couple of years to several years. This is a key element of your monetization strategy and can be material to the health of your business. It’s essential to give your customers time to adjust and understand the new value proposition.
✔𝐏𝐫𝐢𝐜𝐢𝐧𝐠 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 🎯: Crafting an entirely new pricing strategy, which might involve fundamental shifts in your business model, can span several years. Such changes are monumental and require thorough research, analysis, and a seamless transition plan. Communication becomes paramount during this journey.
There’s no strict formula here. The correct frequency for adjusting pricing elements depends on your industry (does Dynamic Pricing apply?), customer base, competitive landscape, and broader market trends. Most importantly, it depends on the element of your pricing that you’re tweaking (whether it’s pricing points or the full pricing strategy).
If you’re still confused about all these terms and what we mean by pricing strategy of value metric, have a look at my Pricing Resources and Product Monetization canvas (also available as a Miro template).
#PricingStrategy#Pricing#productmanagement#monetization
My name is Salva, I am a Product executive, helping tech companies discover, shape, and sell better Products. My work and writing are mainly about subscription models, product pricing, e-commerce/marketplaces, and creating top product organizations.
My superpower is to move between ambiguity (as in creativity, innovation, opportunity, and ‘thinking out of the box’) and structure (as in ‘getting things done’ and getting real impact).
I am firmly convinced that you can help others only if you have lived the same challenges: I have been lucky enough to practice product leadership in companies of different sizes and with different product maturity. Doing product right is hard: I felt the pain myself and developed my own methods to get to efficient product teams that produce meaningful work.