daily articles for founders

Don't ask customers what they'll pay: tell them  

Ash Maurya with an excerpt from his book, Running Lean:

Suppose I place two bottles of water in front of you and tell you that one is $0.50 and the other $2.00. Despite the fact, that you wouldn’t be able to tell them apart in a blind taste test (same enough product), you might be inclined to believe (or at least wonder) whether the more expensive water is of higher quality.

Here, the price can change your perception of the product. Not just that, but there can be viable markets at both prices and the bottle you end up picking defines the customer segment you fall in.

Great point. The book seems well worth buying, if it's filled with these sorts of insights.

One classic mistake is to send a survey to potential customers suggesting several price points. In such a situation, customers will almost always pick a lower price than what they're actually willing to pay, thus making the output of that survey garbage. More importantly, you'll fail to extract the key insight from pricing research, which is the segmentation of the market and relative sizes of each segments. How many of your potential customers are willing to pay $2 for a bottle of water? Are there enough for you to have a market worth addressing?

More from the library:
Focus and myopia
How to start a startup
How to write good startup advice articles
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