One of the toughest parts of taking a product to market is getting the pricing right and it’s no surprise that pricing is such an important part of any business’ strategy.

Pricing has a direct impact on revenue, profitability and valuation, and is closely connected to your product’s positioning and how the market perceives it.

Also, poor pricing is one of the “Top 20” factors for startup failure, according to a CB Insights report. However, large companies may also struggle to get their pricing right, especially when creating new products. 

Many of the common mistakes center on not formulating a clear pricing strategy and only considering it as an afterthought. 

If you are not explaining the value of your product, then customers will focus on cost and not understand the value you are creating. Does your product make money, save money or time? How much?

Many product managers fall into the trap of relying on their own emotional perceptions of the product as the benchmark for what their customers perceive it will be. This way of thinking can push customers away as their perceived value (and the price) may not match that of the product.

For B2B products, understanding what budget you’re targeting is crucial in determining your product’s price point. This means knowing the corporate budget of your target segment as well how many people are involved in the decision making process.

A well-defined pricing model can be customized for different markets, segments and audiences; but customers need to be clear what they are getting when paying for your product.