Pricing is tied to perception of you

The way you price your offering is closely related to how people perceive your company and the offering. Impacting that perception allows you to change the pricing as well.

Pricing is tied to perception of you

Price your product is sold at has little to do with the amount of work put into the product, or sophistication, or how much better the product is compared to the competitors. It is mostly related to expectations and perception.

Corollary: You can know how much your price is going to be even before starting to build the product.

The industry you are in is hard to change

Perhaps this comes as surprise, but business have been operating and earning money for hundreds of years. There is such thing as "business as usual". There are things that needs to be taken care of, processes in place for them, money exchanging hands to handle such processes, etc.

Even though new industries form all the time, and buzzwords are formed even faster, business as usual is still very much the thing. Your new flashy industry impact perhaps 0.1% of the processes of any given larger company and is treated as just another thing that needs being take care of.


Say you make ERP software. You compete against other vendors making own ERP software. While you can argue that your very modern and agile processes allow you to charge half the price of everyone else, you will be disqualified at the beginning because you will be perceived as inferior solution. People expect a certain price range and expect you are undercharging because you cannot deliver everything your competitors do.


If you are a brand name, you can dictate a higher price than a norm, because your name is a social proof to your customers. Them being able to afford your product signals they are successful. However, if you are starting out, it is hard to compete before you have enough recognition. You will have to lower the price or compete is a smaller pool where your name can quickly become a brand by attacking a niche and build a product perfect for that niche.

Once you own the niche, you expand.