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Estd 4.22.2023
Below is an answer based on the approach in our pricing strategy book, Price to Scale:
• Direct Answer
In early-stage launches with limited usage data, it’s generally better to proceed cautiously. While there may be signals that you underpriced your product, making a large price change too soon can lead to unintended consequences—especially since you lack robust empirical data. Our book suggests that you should be “directionally accurate” early on and then refine pricing as more usage data and market feedback come in.
• Supporting Insights from Price to Scale
– In cases of nascent products, our book explains that early pricing is often based on limited empirical data and market research (see our discussion around early product launches on page 141).
– We share examples where a big pricing adjustment can take six months to a year, underscoring the need to capture sufficient usage data and customer feedback before making significant changes (refer to page 211).
– The overall recommendation is to start with a pricing strategy that aligns with your initial market positioning and then iteratively adjust as you gather real-world insights, rather than making abrupt changes based on incomplete data.
• Practical Application
– Conduct incremental market research and customer interviews to validate whether the product’s value is being fully captured at its current price.
– Monitor usage patterns carefully. As more customers use the product, use data to model potential price points without shocking your existing user base.
– Plan for a measured, well-communicated pricing change once traction deepens. This level of caution helps avoid issues like contract misalignments or customer churn tied to unexpected price hikes.
• Summary or Takeaway
In summary, while it’s natural to worry about underpricing at launch, our pricing strategy book advises that you wait until you have enough traction and usage data. Use initial market research results to inform incremental adjustments rather than a large jump immediately. This balanced approach minimizes risk and ensures that any pricing changes are backed by solid empirical evidence and market understanding.