Refining Products and Price Packages

You have so much to offer the world. How can you possibly streamline all that you do into a finite set of products and services?

The fact is that you have no choice but to focus and figure out how you’re going to price and package your product – otherwise, you'll have trouble scaling and recruiting new customers.

One thing—don’t go freemium. You’ve built a product that’s worth paying for. We’ve learned free users don’t give great feedback.

The process of creating packages and prices is actually pretty hard. It might throw your brain in to somersaults and drive you bananas. But when you're done, you'll have a clearly defined revenue channel.

If it doesn’t work out the first time, be willing to change pricing, offerings, and support, but make sure you’re always committed to your core beliefs.

Roll up your sleeves, whip out your Excel spreadsheets, and lock your team in a room. Here are the steps to refining products and price packages:

Step 1: Resurrect Your Customer Surveys

Remember those feedback surveys you ran? Or those awkward phone conversations that you and your sales reps joked about?

It's time for your customer experiences to make a comeback – in a big way.

Dig deep into your memories (and actual files) to find your most meaningful customer conversations. And if you don't have any? Get on the phone with your most valued customers immediately.

Productization should start with your customers and prospects. What do they love about your business, and what additional options do they need? What are their biggest pain points?

Remember- you don’t have to do everything your customer wants. You just want feedback to figure out how well your product is working for them.

Step 2: Think Bigger – Survey the Whole Market

Sure, five of your customers may want something, but how big is the actual market?

Productization means thinking big. You need to look beyond your existing sphere of influence to understand the potential of what you're doing.

As a small business owner, you probably have an intuitive understanding of what needs to get done. But businesses aren't built on hunches – you need data.

Before productizing your service, you need to build some forecasts to quantify your market. If you don't have access to primary data, rely on what's freely available from organizations like the Pew Center and U.S. Census Bureau. You can also look at secondary sources from market research vendors like Nielsen and Forrester.

Create a blueprint of your market that includes a forecasted dollar value. You're in the best position to decide what mathematical model works best for your business. Feel empowered to make that judgment call.

At this point in the game, it doesn't matter if you're super accurate. Make an educated guess. Stand by it. The goal is to establish direction so that you're not throwing darts in the dark.

Step 3: Brainstorm Until You Collapse

Hopefully your office has a whiteboard – you're about to partake in the biggest brainstorming session of your life. This will be the truest test of your collective bravery.

Make a list of your company's most valuable offerings and strengths – and everything you think you should be doing. At this point, you shouldn't even think about your customers. If you find yourselves heading in that direction, just stop. At this point, you're closed off to the world.

As you brainstorm, remember a few core rules.

Do whatever it takes to maintain a continuous flow of ideas. Make sure there's plenty of coffee. When it's time to move on, you'll know. The stopping point will feel natural.

Step 4: Play Matchmaker

Take the list you generated in Step 3, and marry it with the inferences you made in Steps 1 and 2.

Here are the steps that you should take:

Focus on a handful of initiatives. Keep it simple.

Step 5: Put Your Sales Hat On

At this point in the game, you probably have a whiteboard with a bunch of chicken scratch for what you think you should do.

Are you ready to get out and sell? Not yet. You'll probably scare people away.

It's time to put a shiny case around the engine you've built. That means defining the value proposition for your core products and service.

With your team in a room, brainstorm a couple of sales pitches. Reiterate your hypothetical customers' problems and how you're solving them. Add a sales-y kick. Share your ideas as a group, be relentlessly critical, and refine until you're happy with what you're pitching.

Step 6: Create Tiers

Your customers fall into different buckets – based on company size, budget, and affordability. Create a clear understanding of what differentiates your customers and their abilities to buy.

Step 7: Reduce Your Options to Three (or Four!)

It happens every time you go to the drug store. Your intentions are straightforward enough – you need shampoo. But when you get to the store, you end up lost in an aisle with 300 of the same darn thing. You stand there for a few minutes until you're confused out of your mind.

Eventually, you pick something. You try not to over-think it, but you can't help but wonder whether you've made the wrong decision.

Analysis paralysis is a buzz killer for sales. When productizing and packaging your services, keep the options as simple as you can. You need to be able to explain your packages in one or two short sentences. Even better – they should be able to explain themselves.

We’ve tested to find our perfect number of packages is four:

Grasshopper Sign-up

You're Almost There

Up to this point, you've created the structure. Now it's time to paint your house, decorate, and add the final touches.

Professionalism leaves a lasting impression. Work with a designer to create product kits, pricing tables, and PowerPoints.

A solid framework is only the first step. Make sure that your design communicates your ideas succinctly, efficiently, and effectively.

Finish strong, wow your prospects, and leave a lasting impression.

Ways to A/B Test a Pricing Model

Yay! Now that you’ve set up a structure, you should be thinking about testing. A/B tests allow you to compare two different versions of something to see which performs better – for example, you could A/B test having three price options versus having seven.

You can test a number of different aspects to improve conversation rates and make more moolah:

Be creative. There are tons of different things you can test to make sure your pricing is spot on. Just be careful—screwing around with pricing can be dicey. You might make a change that ends up with a lot more sales, but you also might do something detrimental, which can potentially be catastrophic.