Building Your Pricing Inventory

pricing inventory

We’ve all been there before. 

The last few months have been spent building a new product. Tireless days, nights and weekends, bug-fixing, user tests, delays, the list goes on. 

The big launch day is coming and there is still one thing that needs to get done: Pricing.

Now things get tricky. Why? Because a pricing process is not something many new ventures have ready. In one of our studies on startup pricing, we found that less than 30% of new ventures have a pricing process. When the CEO is the primary decision-maker, even less have a formal process (see chart below). 

Pricing process
Source: HelloAdvisr research






Even if you’ve priced a product before, you’ll often find there is a lot of information required, and potential team friction getting to a decision. 

Here’s what the typical process looks like: 

  1. Trigger: Founder / CEO questions, “We need to make a decision on the price. Bring back recommendations.”. *Nods from the team*
  2. Research: Team does online research collecting prices from “similar” companies, products, or direct competitors. Team collects more information to see what other pricing models and approaches are out there they might not have considered. 
  3. Assess: Leadership team narrows down the list of pricing models to select the one they want to go with. Will narrow the range of price points/level that is relatively close to the competitors found in the online research. 
  4. Test: If the leadership team is still not confident with the pricing and is looking for more validations, it will run tests. This usually entails some “trial and error price tests” to estimate customer demand. (In our research less than half of companies actually run price tests or trials ahead of a new product launch). 
  5. Decide: Pricing decision made. New is pricing updated on the website and other sales and marketing assets. 

Does this sound familiar? (for your reference, a typical pricing process will involve at least 20 steps, involving at least 4 functional teams or leads). 

Teams are trying to increase confidence in their pricing decision, but often falling short. Pricing is often cited as one of the top reasons why startups and new ventures fail.


why startups fail
Source: CB Insights









What’s the problem? 

It starts by fixing the input collection – your pricing inventory.


Build Your Pricing Inventory 

Rather than working on your pricing in a vacuum, start by getting your pricing inventory right. 

Designing better pricing requires inputs – a lot of inputs. Making sure you have an inventory of what you have, don’t have but can get, and don’t have and won’t be able to get, will help to save time and focus attention. 

A pricing inventory will establish what you are basing pricing decisions on, but managing potential bias and corrections required to move forward. If you are not checking off a majority of these boxes, then you need to assess how pricing decisions are made and whether pricing is supporting your growth strategy. 


Your pricing strategy

No strategy means there is a lack of clarity of where you’re trying to go. It means you’re not sure what objectives you want your pricing decisions to help you achieve. Don’t guess.

Spend the time to figure out what you want pricing to help you achieve. This may be some of the most important time you spend on your pricing and your broader growth strategy


Your market

Well-prepared companies understand not only their place in the market but also the conditions that drive the market. This includes:

🔲 Distribution channels, business models, and suppliers, and vendors.

🔲 Geographical and seasonal dynamics. 

🔲 Cultural differences – where applicable – within the market. 

🔲 And more…


Your competition

There are many levels to competitive intel for pricing, so awareness of what drives pricing strategy and models for competitors is particularly valuable.

🔲 On the most basic level, collect competitors prices (publicly available), but rarely consider the drivers for competitor pricing.

🔲 This can include where strengths in the competitor offer sit, and how much do competitors follow the market leader’s behavior.

🔲 Equally important is the extent competitor alternatives are replacements or substitutes for your offer. 

🔲 And more…


Your customer

If you went through the process above, you saw there is sparse intel about your customer. There is so much to learn about YOUR customers to help you build prices through a segmented, value-based approach.

🔲 One of the critical customer inputs are your Customer Rings. These are micro-segments that hone in on customer’s preferences to build value-based pricing.

🔲 Customer perceptions and value drivers. 

🔲 Price sensitivity and tradeoffs. 

🔲 And more…


Your product

There is some overlap between inputs about your product – the product itself as well as the offer – and your customer, but the goal is to learn what elements of your product do customers really care about and are willing to pay for.

🔲 Product substitutes. 

🔲 Feature benefits (current and planned). 

🔲 Terms and discounts. 

🔲 And more…


The One Thing You Need To Avoid

How many of these inputs have you already collected (and collect regularly)? How many do you use to build and manage your pricing?

If the answer is very few, you’re not alone. 

To confront this challenge, it is vital you do not waste time. 

One of the biggest mistakes we see entrepreneurs make is wasting time in the pursuit of being fast and not wasting time (yes, ironic). 

Now you have a pricing inventory outlining what needs to be collected to start reframing how your company prices. More importantly, put this into action in your pricing and monetization strategy. 

The upfront time to collect, assess, and design pricing is a lot more than many anticipate. But the initial time and effort to setup pricing pay HUGE dividends – time, decision quality, and revenue impact – from launch to EOL. 

The goal is not perfect prices, but better decisions on pricing. Pricing is an on-going process for the life of your product and company.


Final Thoughts

We have spoken to hundreds of entrepreneurs and companies and too often, pricing is built on limited information – even if not directly related to their customer or product. This too often leads to misguided pricing decisions that impact revenue traction and profitability. 

When markets quickly change as we’re seeing today, companies need the flexibility to assess and adjust prices quickly.  Too often the lack of structured inputs, analytics, and management programs makes the process frustrating and do not build the confidence experience should usually yield. 

Start with this pricing inventory to see what type of information is actually being collected, and where biases in your pricing decision lie. Leaning on simply “what’s available” can lead to misguided pricing that reduces revenue and profitability potential. 

The real opportunity is what else can be done with pricing to create differentiation from competition, and also yield the business results needed to accelerate growth. 

No one will ever complain about not having to recreate the wheel, and not having confidence in the decisions you make. 


Do you have everything in our pricing inventory? What are we missing? Let us know what you think!


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