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My Product Deserves its Price and Other Fallacies | Iterative Path

There are several things wrong with Turing’s approach to price realization.

  1. Thinking and saying the product deserves the price tag because of its value. No product deserves its price because we say so.
  2. Ignoring the value water fall – even if we can objectively show the value created by our product there are many factors at work that reduce the final realized value.
  3. Ignoring reference price effect – Sure customers see value in a  life saving drug but if the price they have been paying for it (or its alternatives) sets a strong reference price in their minds.
  4. Not practicing versioning – They saw the drug as adding considerable value, priced far lower than what some customers are willing to pay hence they felt across the board price increase was the solution. If some customers have higher willingness to pay then just target them with a product version at a price and value packaging that nudges them to self-select to that version.
  5. Extremely poor pricing communication – The biggest part of pricing strategy is effectively communicating it to customers. In this case they did no communication and let the media define it. To make matters worse their CEO took to twitter to attack everyone and justify with, “my product deserves the price tag” claim.

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My Product Deserves its Price and Other Fallacies | Iterative Path.

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