How can we tell if we’re underpricing or overpricing our product when clear market benchmarks are lacking?

Below is a summary of how our book, Price to Scale, suggests you approach this challenge:

• Direct Customer Feedback & Self-Assessment
One good first step is to review the reactions you’re getting from current customers. In our book we recommend using a form of self-assessment—like our Product-Market Fit chart (see Figure 25)—to help you understand if you’re missing the mark. If customers remark that the product feels “too good of a deal” or seem to question its perceived quality, that could be a signal you’re underpricing.

• Testing Multiple Scenarios to Gauge Sensitivities
Without established market benchmarks, it’s effective to implement structured price experiments. As discussed in Price to Scale, you can use fixed trade-off screens or a series of probing questions in straw-man scenarios. These methods allow you to obtain reactions that not only provide feedback but also help project how different segments of the market may respond to various price points.

• Look at the Sales Motion Data
If you already have a functioning sales motion, look at the empirical data from your customer interactions. Identify pricing levels that lead to sales success versus those that might be deterring potential customers. A pattern where many customers quickly jump in could indicate you’re undervaluing the product; conversely, if you see hesitation or pushback, you might be overpricing.

• Balancing Revenue and Market Share
Ultimately, pricing is a balance: you aim to optimize revenue by matching the number of customers willing to pay what you charge, while securing a healthy market share. Our book highlights that there is no one-size-fits-all threshold. Sometimes a strategy that involves lower upfront prices to boost market share is the right call, whereas other times, particularly for enterprise products, maximizing margins may be preferable.

In summary, when clear benchmarks are lacking, rely on a combination of qualitative assessments (like ensuring your pricing doesn’t undermine perceived quality) and quantitative customer data from your sales process. Experiment with different pricing scenarios to probe customer price sensitivities, and adjust based on what the mix of market feedback and internal self-assessment tells you. This balanced, iterative approach is at the heart of our pricing strategy methodology in Price to Scale.