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Pricing Impact on Operating Model

Pricing has a significant impact on your operating model. It is also one of the most powerful growth levers available to most businesses (yet also one of the most under-utilized).

Companies are often scared to increase prices for fear of losing loyal customers, lowered satisfaction ratings and being perceived as price-gouging for their products.

Ironically, keeping your prices stagnant is one of the quickest ways to deliver lesser value to your customers.

Lower margins > lower bandwidth to provide value > lower customer experience > lower customer satisfaction

This does not mean increasing your pricing indefinitely. It means finding the right (and fair) scientific price for your product so that you have a better operating model to deliver more value.

Getting to this answer takes work and going through customer data to truly understand what is a fair price for both sides.

At the heart of such a project, a lot of data needs to be analyzed, including:

  • Churn by cohort
  • NPS ratings
  • LTV by pricing plan
  • Product usage by customer type
  • And much more

This is where product, marketing and sales need to come together to triangulate the right pricing.

It's not easy but it's one of the highest ROI projects in most companies.

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