A simple way to uncover what your customers are willing to pay
To understand what customers or users are willing to pay means understanding what value they associate with your product or service. We can take a guess, pick a ballpark number, or use our instinct — but 9/10 times we’ll probably be off the mark. On top of this, we will likely need to be able to explain why our price point is what it is, that is, effectively communicate the value we provide/create for specific customers. However, there is a way we can do both at the same time and surprisingly fast!
Define your target customer
First up, we need to be super clear on who is our target customer. It is easy to fall into the demographics trap here and solely focus on age ranges, income brackets and genders. However, I’d suggest you think much more about behavioural segmentation/targeting. This could mean defining customers by specific activities, outlooks, associations or needs.
A great example of this is Spotify’s infamous ‘Lean forward/Lean back’ behavioural segmentation: When looking to categorise their listeners, instead of creating n-number of complex demographic segments, they identified and defined two main behavioural archetypes with very specific needs: ‘Lean forward’ being those who mostly knew what they wanted to listen to, and ‘Lean back’ being those who wanted…
