Research has found that approximately 75% of product launches fail. While there isn’t agreement on the exact amount – Simon and Kucher estimate it to be 72%, while Harvard Business Review belief it to be even 90% – it’s startling to learn. And imagine the wasted resources. 

But how can this be? One of the main reasons for failed product launches is that the price doesn’t capture the perceived value of the product. We know that prices are not perceived in siloes, but there are common mistakes that we should aim to avoid. 

How Pricing Can Save Your New Product Launch

Mistake 1: Too Many Features, Too Little Focus 

Engineering and product driven cultures often focus on killer features to drive up prices. However, often having many features doesn’t end up justifying the price. Why? Not all the features are important to all buyers, which makes the price feel too high. The value just isn’t right. 

Solution: People can comfortably process only 3-5 pieces of information. Instead of aiming to please everyone, the seller should focus on communicating the 3-5 core features that they know are essential for the target group. 

Mistake 2: The Best and the Cheapest 

Picture this: you are launching a product with 3-5 features that you know your target audience will love. The price is even cheaper than competitors. Yet, still, the product flops. 

How could that be? The product and price are sending mixed messages, which signals risk to the buyer. The best simply can’t be the cheapest according to buyers. Therefore, it’s easier for the buyer to not take the risk of buying the product at all. 

Solution: Price is a signal and cue of the value of your product. The price should signal the same message about value and quality as the product. So don’t be afraid to ask a higher price for higher quality. 

Mistake 3: We Don’t Want It 

The harsh truth is that not every product is needed or wanted. The right price will not save this product. However, this is why early price testing is important, as it will signal early in the development process that the product might not be commercially viable. 

Successful Product Launches Consider Price 

Product innovations typically follow a similar cycle of ideation, concept development, production, and launch. Unsuccessful companies usually think about price at the end of the development process. However, we suggest that the product and price should be developed hand in hand.  

How does this happen in practice? Price planning is included throughout the product development process: 

•  Ideation: Understand the value of the product for the potential buyer 
• Concept development: Focus on the features that the buyer is willing to pay for 
• Development: Ensure that the price covers the costs and offers an acceptable profit 
• Launch: Make sure that the price communicates the wanted message (so that your prices are not giving mixed messages)  

With these practices in mind, your product launches will benefit. By keeping pricing in mind, you can tell right away if your new product idea has commercial value, it will guide you to focus on the right features for your target audience, and it will signal early on if the product is a potential failure.