Defining a new price for your new product or for an upgrade of your product can be a tricky one. You must do some research to see what your competitors are asking for a comparable product. And you also want to check the price positioning of your current product portfolio so you can determine the correct price point for your new product. Let’s get details on how to create a price positioning for your new product.
How to do this in an objective and structured way?
- Open a spreadsheet in Excel or Google Sheet.
- In a new worksheet you’re going to create a table with features that you’re convinced are important for your new product.
- Add your competitor features as well.
- In vertical order, you write down the features.
- In horizontal order, you write down the competitors’ names in different columns.
- Indicate per competitor if they have that feature. iIf they have the feature, you put a ‘1’. And if they don’t have that feature, you put a ‘0’.
Check out my blog article on How to create a benchmark overview for your new product to learn more on features and pricing of your competition.
Allocating values to each feature in your price positioning overview.
Next step is to define a value for each feature. Some features are more important than other features. If your product or your competitor product has a feature that consumers really value, you’ll rate this feature higher compared to other features.
This enables you to decide whether the price point of your new product is correct.
How to create a price positioning graph?
When you create a calculation based on the features and their values, you get a table with values. Based on this table you can create a graph in your spreadsheet.
One axe in the graph contains the price, and the other axe mentions the features. Spread though out the graph, you have dots showing the price positioning of your new product and of your competition.
In one glance you see if your new product is priced correctly compared to your competition.
This price positioning overview will give insight into your price positioning and will help you evaluate and finally decide on the list price of your new product. It’s also good to do this exercise within your own product portfolio.
Here you have it! You know now how you can create a price positioning overview for your new product.
Want to becoming a great product manager?
I’m going to create a product management course, which will include a price positioning spreadsheet with all the calculations already in it. I’m working on it right now. If you’re interested, keep an eye on my newsletter and socials to learn when this course will be available.
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