top of page

When to redesign Pricing Model?



In my last article "What happens after Product-Market FIT", I wrote about what you need to focus on during the Go-To-Market FIT stage before you can LEAP across the chasm to finally secure your position into the Mainstream Buyers' Market to scale effortlessly.


Given the current economic environment affecting cautious and hesitant spending, your growth might be dampened.


If you have already achieved Product-Market FIT for some time, this might be the best time now to review your PRICING MODEL.


Let me repeat the sequence.


After you have:

1) Double down on your BeachHead segment,

2) Align your Channel Partners to Beachhead

3) Find a Marketing Channel Medium that works predictably, then

4) Redesign your Pricing Model


See the diagram below for the stage indication.






WHY?


At this stage, you will now have better and more accurate new data points + insights about:

1) What customer VALUE + WILLING to PAY

2) Understanding of CAC cost

3) Possible Average Revenue Range per customer

4) And check if your Unit Economics X potential Volume of customer = give enough $$ to sustain the Company stage burn rate.


AND if point (4) is not looking good, then you NEED to review the PRICING MODEL. Especially given the current economic environment regarding funding and cost of capital. It is the fastest way for you to improve the bottom line and cash flow.


Below is my PRICING MODEL Design Framework at a high level, which I presented at @Stone & Chalk Melbourne.







Given the market environment, the following 4 key design constraints has probably shifted in the last year and will continue to do so next year.


Namely:

1) Customer Budget Constraints

2) Market Price Elasticity Constraint

3) Cost Constraint

4) Growth Constraints


So, it might be time to chew over this and review your PRICING MODEL to maximise profit and sales conversion.


Even if business is good, and you are the lucky ones where market trends are supporting your growth, it is best to redesign the Pricing Model BEFORE you double down on SCALING at the "Growth + Moat Stage".


Because, you don't want to scale with -ve unit economics, and even if you have good +ve UE, you might still be leaving money on the table.


Therefore, don't skip this Pricing Review Step on your way to crossing the CHASM.



This article is an excerpt from my newsletter, you can subscribe to access full content and early access. Need help with your pricing redesign? Reach out for a chat.

Comentários


bottom of page