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The Silent Killer of New Products – Lazy Pricing | Harvard Business Review

HBR: Is new products’ high rate of failure really a pricing problem, or does it reflect a more fundamental innovation problem?

Georg: We believe that there is a more fundamental problem. Of course, the pricing is always what signals the problem, but behind that it is how the innovation process is set up. However, our experience has been that [when a product fails] it’s not a technology problem or a pure R&D problem — it is really around marketing, customer segments, and of course pricing.

Madhavan: This is very consistent in our experience working with both startups and large companies. They build a product hoping to monetize, but not knowing whether they will be able to. What allows a company to extract full value is having a clear pricing plan from the get-go, not waiting until the end and then saying, “Oops, we need a price!”

Your survey also details how hard some companies are finding it to raise prices. For instance, you found that only a third of all planned price increases actually get implemented, and for every 5% price increase attempted, only about 1.9% is achieved. Why are companies having such a hard time raising prices?

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The Silent Killer of New Products – Lazy Pricing.

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