Why Your Product Pricing Might Be Failing You (And How to Fix It)
🚨 Breaking News: Even industry giants like OpenAI get pricing wrong.
Case in point: Sam Altman himself admitted their $200/month ChatGPT Pro plan isn’t profitable.
His words? “I personally chose the price and thought we would make some money.” Spoiler alert: They didn’t.
Pricing isn’t just a number—it’s a strategic dance. Yet, most companies stumble. Let’s explore the 3 most common pricing pitfalls and actionable steps to avoid them.
🚩 3 Pricing Pitfalls to Avoid
1️⃣ The HiPPO Effect (Highest Paid Person’s Opinion)
When the CEO (or another exec) picks a price based on gut instinct, it’s a recipe for disaster.
No, they don’t have a crystal ball—just a strong opinion.
💡 Pro Tip: Involve a diverse team to make data-informed decisions, not ego-driven ones.
2️⃣ Over-Reliance on Qualitative Data
Asking customers what they think they’d pay ≠ what they’ll actually pay.
Why? Surveys often assume ideal conditions without factoring in real-world friction.
🔑 Remember: Price < (Perceived Value – Friction)
3️⃣ One-Price-Fits-All Mentality
Launching with a single price point and calling it a day? 🚫 Big mistake.
Pricing isn’t static—it’s a living, breathing strategy that needs constant refinement.
💡 How to Nail Your Pricing Strategy
1️⃣ Track Key Metrics Across the Ecosystem Don’t just look at conversions. Pay attention to:
Churn rate: How many customers stick around?
Retention/engagement: Are they getting value?
Expansion rate: Are they upgrading to higher plans?
Cost impact: What’s the margin at each price point?
2️⃣ Run Price Sensitivity Tests Test 3 variations: your current price, a lower price, and a higher price. Example: $25 → $19 & $29.
📈 Result: Understand how pricing affects conversions, churn, and long-term revenue.
3️⃣ Test on New Users First
Returning users hate surprises, especially fluctuating prices.
Start with new users for clean data and roll out changes later.
4️⃣ Keep Pricing Changes Isolated
Don’t redesign your pricing page, change plan names, and adjust features all at once.
Isolate variables to pinpoint what works.
FAQs About Pricing (And Why You Shouldn’t Fear Testing)
“Is price testing unethical?”
Not testing is more unethical - it risks subpar outcomes for your business and customers.
“What if price tests cause backlash?”
Most customers won’t notice small changes. For the few who do, empower your support team to offer the lower price.
“How do I handle legacy pricing?”
Upgrade users paying more to higher plans without extra cost.
Gradually increase prices for those paying less, ensuring they see added value.
Final Thoughts: Pricing Is a Journey, Not a Destination
Your first pricing decision won’t be perfect—and that’s okay! Treat it as a continuous learning process. The best pricing strategies balance data, customer feedback, and business goals.
So, don’t fear the pricing game. Embrace it, test it, and watch your revenue grow. 🚀
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