Price Comes Before Product Development

Most startups build a product and only then start a discussion with customers about how much they will pay for it.

The pricing discussion should come before product development.

In fact, the decision to build the product will depend on how much you can charge for the product.

Before starting product development, create a one-page description of the product.

List out the key features and benefits along with the price.

Make several test mailings and in-person discussions to check what price the target customer is willing to pay.

Vary the price from one test to the next and check the results.

Never put a higher and lower price on the page and then ask which one to choose.

The prospect will always choose the lower price.

Instead, put one price on the page and then ask, would you buy it or not?

In each test case, note which customers would pay a higher price and which would only pay a lower price.

This will help you determine the buyer personas and how to price a good, better, best product offering.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.