In this two minute video I describe how to structure your product for the market you are going after.
Structuring Your Product For the Market
A transcript of my comments follows.
You have to look at the market you’re going after, how they’re going to make the purchase, and how streamlined you make the product to do that. So for example, if you’re going low into the SMB market, it’s going to be sales service. Somebody’s going to buy it off your website with a credit card. Then it’s got to be simple, it’s pretty much got to be all you can eat. It might have a basic in advance, or basic standard advance, but it’s not going to have a lot more than that.
If you’re going after the bigger market, basically the bigger you go, the more likely it is you are going to have a lot of customization, a lot of configuration, probably a lot of services supporting what you sell. So, it’s pretty easy as you look at the market you’re selling into, to figure out natural break points and how you structure your product, and pricing to map to each of those markets. And I’d say again, don’t reinvent the wheel. Look at how folks in the market, they may not be your direct competitors. You’ve got a much better offer than what they do, but look at how they structured things. So, if they’ve been in the market a number of years, they’ve learned how the market accepts product, and what it expects to see in it.
I think you’ll have pressures from the market, to price based on price. Here’s what I can afford. You need to think through what your value is, and what the value is you’re offering in price off value. And the reality is, the answer is somewhere in between. So, you may feel that you offer a value proceed of $10,000, and the market thinks it’s $4,000. Well, you’d probably be happy with $7,500. But you need to do the stance with the market, where they’re just going to price based on what they already know and what they’ve seen on the shelf in the grocery store. But if you’re offering has added vitamins and fiber and enriched goodness and all those things, and you know that it offers greater value, then you’ve got to hang in there and charge for that.