Despite the best efforts of even the most brilliant business people, if you’re losing money on your product, you can not make it up in volume, try as you might… 

Kidding aside, pricing is rightly perceived as one of the more complex elements of a go to market strategy because there are so many two-way factors interacting, each influencing and being influenced – including, unfortunately, emotions and rationalization tendencies of a founder. 

Optimal pricing will depend on costs, how competitors are priced, and what potential customers will pay. Finding this optimal number takes time, research and data. Pricing is also strongly correlated to, and, simultaneously influencing and being influenced by:

1. Profitability
2. Quality perception
3. Value perception

Pricing is also a strong influencer defining a brand’s addressable market/consumer accessibility, as well as defining trade promotional campaigns, but at the end of the day, building a sustainable pricing model that drives profitability matters most, because without profits, there isn’t an ongoing concern. 

Strategy
Taking a step back, let’s think strategically about pricing over time and by channel (exclusive of cost input drivers). In your early days, your initial pricing is targeted to the highest value consumers - innovator and early adopter consumers who care the most about the brand and who have a willingness to pay more. Long term, consider how your price will evolve over time as consumer adoption matures. Below is a recommendation target we made to a client for pricing evolution over time, overlaid on the consumer adoption curve (for a more detailed treatment of this consumer adoption curve, check out the fourth installment in this series: People (Consumer) Strategy):

Brand prosperity is a lot like the root system of a tree. Although hidden beneath the soil, the root system of a tree is the origin of its strength, stability and capacity to flourish. A nourished root system grows a tree that produces a bountiful yield. Conversely, a deprived root system can compromise the tree’s ability to produce at all. 

In similar fashion, the root system for a brand must be strong and healthy for the brand to prosper. Each root is an integral part of a brand’s path to not just bear fruit, but flourish. A strong root system for a brand is rooted in a disciplined and methodical Go to Market strategy. This is the fifth in an 8-week series outlining the framework of a successful Go to Market strategy. The previous articles can be found here:
First: Purpose
Second: Product Strategy
Third: Production Strategy
Fourth: People (Consumer) Strategy

The fifth root in a successful Go to Market strategy is the focus of this article: Pathway (Commerce) Strategy.

Thank you for your interest in this topic. We welcome your feedback and comments, and the opportunity to help you on your journey.

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Imagine you’re selling your newly launched brand in a few dozen locations, and the Kroger or Target buyer expresses interest in placing your product in 250 locations. Should you do it?

What if the Walmart buyer agrees to place your specialty product in line with the traditional CPG competitive set “to maximize shopper exposure”? Should you do it?

If you’ve been selling your new brand on your own web site for the last 3 months, are you ready to start selling in brick & mortar retail? 

Most of the time the answer to these questions is “probably not”, but of course, the answer depends on many factors. Having a compass and benchmarks to help arrive at these decisions methodically, with focus and with discipline is vital. Hopefully I’ll shed some light on the many considerations when developing or refining your commerce strategy.