When I launched TheraNest in 2013, I had no clue how to address pricing. What’s too high, what’s too low? So I did what most early-stage CEOs do: I priced low. I mentioned “affordable,” “low cost,” and similar phrases a lot.

Surprisingly, I continued to run into prospects who said it was too expensive. This drove me crazy primarily because many of these prospects asking for the lowest price were sometimes the most demanding when it came to features and onboarding. There was a mismatch between how they wanted to buy and what they could afford to pay.

With time, I found a customer segment that hardly ever mentioned pricing as too expensive, even after we doubled pricing. In many cases, these customers also required the least handholding.

Matching our ideal customer type allowed us to double the starting price with minimal grumblings and acquire customers who constantly upgraded with minimal effort. It was a big reveal for me about matching customer buying patterns to customer price points.

How?

First, determine how your customers want to buy. Are they no touch, low touch, or high touch?

Second, at the current stage of your product, does it require high, low, or no touch? You can’t sell high-touch products to no-touch customers. The barrier is too high to overcome, no matter how low you price it.

And finally, what’s the price point your ideal customers can afford?

If there is a mismatch between price point and buyer type, the business will never be able to scale. High-touch customers or products matched with low-price point customers will lead to an unscalable business. High-touch buyers and products need to match with higher pricing.

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If you have low-touch customers, they typically will expect lower-priced products.

The ideal world is high-priced products, matched with low-touch customers buying a low-touch product. It’s rare, but once in a while, it happens. Some semi-luxury products fall into this category, for example, a Lexus vs a Toyota of similar build.

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Here is the bottom line:

As you evaluate your product and pricing strategy, validate precisely where your ideal customer is on the touch and pricing spectrum and price accordingly. Then, do the hard work of making your product constantly match the delivery expectations of that ideal customer.

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What similar pricing stories do you have in your business? I would love to hear it.

P.S. We have opened up the next cohort of our Exit Ready Flywheel Coaching. It’s designed for Founders and CEOs of companies trying to hit the next level of scale post-startup. I’ll coach you and give you tools and frameworks to build exit-ready businesses whether you plan to exit or not. It’s our program for helping founders and CEOs build high-value, highly efficient businesses. Space is limited per cohort.
Learn more at https://shegunotulana.com/the-exit-ready-flywheel-coaching/​

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