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Mimicking is the easiest way to gain acceptance. This is why competitive pricing is so alluring. There are drawbacks but it's useful if you keep in mind the following: You need to carefully distinguish exactly who are your competitors. A lot of the time I've seen clients benchmark themselves against major enterprises such as Salesforce. And they are a startup. This indicates to me the startup hasn't figured out its niche or value proposition. Understand exactly how your product stands out. What is its uniqueness? Also, what is the cost of your product vis-a-vis the value you are delivering to customers? Once you've figured this out, you're able to whittle down your list of competitors. Then examine your intent. In other words, how you intend to position your new product or your existing product within a new market. These are the main reasons why competitive pricing would be a mainstay of your strategy. Start analysing! Work out your competitor's pricing behaviour and adjust accordingly. While such a pricing strategy is important, you will need to have a more holistic strategy in the long run. For example, adopting value-based pricing. In summary: - Mimicking helps gain acceptance through competitive pricing. - Identify true competitors; startups shouldn't benchmark against giants. - Determine product uniqueness and value proposition. - Assess product cost versus delivered value to narrow competitors. - Plan product positioning in new markets or with new products. - Competitive pricing is useful, but adopt holistic, value-based strategies long-term. Competitive pricing analysis is a worthwhile benchmarking exercise. It ensures your pricing reflects the true value of your product. But it's neither the main nor sole strategy for your product. +++++ P.S. I'm creating a Road to Profitability package for Founders! Book a chat with me to find out more! P.P.S. Follow me for daily insights on finance, entrepreneurship, SaaS, leadership, and random thoughts #finance #financematters #SaaS #entrepreneurship #startups #CFO #pricing
Solely relying on competitive pricing means you are a price-taker. Henceforth, your revenues and profits are taken out fo your control.
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8moBenchmarking is always a good sense check but if you're UVP is well developed, then you should differentiate accordingly.