How to uncover your pricing cheat codes
Think your product might be too expensive? Before you lower your price, read this story:
A company we worked with had a $350 product with a confusing home page. We re-wrote the copy to be super clear using the “now you can” headline formula, and their conversion increased by 40%.
For the second experiment, we bumped up the price to $499, and guess what? It made 𝘢𝘣𝘴𝘰𝘭𝘶𝘵𝘦𝘭𝘺 𝘯𝘰 𝘥𝘪𝘧𝘧𝘦𝘳𝘦𝘯𝘤𝘦 𝘪𝘯 𝘤𝘰𝘯𝘷𝘦𝘳𝘴𝘪𝘰𝘯. I’ve never been so happy to see an inconclusive A/B test. 😁
𝗧𝗵𝗲 𝗽𝘂𝗻𝗰𝗵𝗹𝗶𝗻𝗲: Once people clearly understand the impact a good product will have on their lives, 𝘵𝘩𝘦𝘺 𝘣𝘦𝘤𝘰𝘮𝘦 𝘢 𝘭𝘰𝘵 𝘭𝘦𝘴𝘴 𝘱𝘳𝘪𝘤𝘦 𝘴𝘦𝘯𝘴𝘪𝘵𝘪𝘷𝘦.
𝗛𝗼𝘄 𝘁𝗼 𝗰𝗼𝗻𝗱𝘂𝗰𝘁 𝘁𝗵𝗲 “𝗱𝗼𝗼𝗿-𝗶𝗻-𝘁𝗵𝗲-𝗳𝗮𝗰𝗲” 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝘁𝗲𝘀𝘁
How do you unpack your customer's pricing psychology and find out exactly what they’d be willing to pay extra for? I call this the “door-in-the-face” pricing test.
Next time you’re pitching somebody on your product or doing a validation interview try this:
1. Go through your normal sales pitch or customer interview process until it’s clear they understand the product, are excited about it, and ready to buy.
2. Then, instead of offering them your normal terms, keep it light and friendly, but suggest a surprisingly high price, like “What if I told you it cost $1,000 per month?” (They’ll probably say “no.” That’s perfect).
3. If they say “no,” again keep it friendly and say: “Fair enough, that’s a high price, we’re still figuring out the actual cost. But tell me, 𝘸𝘩𝘢𝘵 𝘸𝘰𝘶𝘭𝘥 𝘰𝘶𝘳 𝘱𝘳𝘰𝘥𝘶𝘤𝘵 𝘯𝘦𝘦𝘥 𝘵𝘰 𝘥𝘰 𝘵𝘰 𝘣𝘦 𝘸𝘰𝘳𝘵𝘩 $1,000 𝘱𝘦𝘳 𝘮𝘰𝘯𝘵𝘩?” Then just be quiet.
4. Stay silent and give them a moment to think about it. Listen carefully because they’re about to give you the cheat codes to premium pricing. They may say something like:
- “𝘐𝘵 𝘸𝘰𝘶𝘭𝘥 𝘩𝘢𝘷𝘦 𝘵𝘰 𝘳𝘦𝘱𝘭𝘢𝘤𝘦 ___ 𝘴𝘰𝘧𝘵𝘸𝘢𝘳𝘦”
- "𝘔𝘺 𝘵𝘦𝘢𝘮 𝘸𝘰𝘶𝘭𝘥 𝘯𝘦𝘦𝘥 𝘵𝘰 𝘣𝘦 𝘢𝘣𝘭𝘦 𝘵𝘰 𝘥𝘰 ____”
- “𝘐𝘧 𝘪𝘵 𝘮𝘦𝘢𝘯𝘵 𝘸𝘦 𝘤𝘰𝘶𝘭𝘥 𝘴𝘵𝘰𝘱 𝘱𝘢𝘺𝘪𝘯𝘨 𝘢𝘨𝘦𝘯𝘤𝘪𝘦𝘴 $50𝘒 𝘱𝘦𝘳 𝘮𝘰𝘯𝘵𝘩 𝘵𝘰 𝘥𝘰 ____, 𝘵𝘩𝘢𝘵’𝘴 𝘢 𝘯𝘰-𝘣𝘳𝘢𝘪𝘯𝘦𝘳”
5. If your product already does those things they mention, happy days – rewrite your home page! If not, start bringing your Head of Product to these pitch meetings. 😏
By the way, sometimes they just say yes. Twice now, people have heard my super high price and just said “that’s fine.” In-fact, they even explained their business case to me. They mentioned other comparable services in their budget that cost them more than what I was asking, so the amount I proposed seemed fair in comparison. (Naturally, I added those comparisons to my pricing page.)
I hope that’s helpful! But it’s a teeny little idea – less than 1% of the insights I share in my weekly newsletter – linked from my profile Matt Lerner
Product Manager @ Stripe | Billing & Pricing for SaaS
2wGreat post! Made me wonder how impactful pricing calculators are for more complex pricing models.