Product Management Tools User Guide
Determining your pricing strategy is equal parts art and science.
The Pricing blueprint guides you through the steps to decide your ultimate business goal for this project and the appropriate pricing strategy to achieve that goal.
To add a fresh Pricing blueprint to your Space, enter your Project Name and choose 'Pricing' from the drop down menu.
'Moon Rock' is our project name in this example.
Your new page will need a name before you can begin working on it.
Begin by naming your blueprint "Pricing" or "Pricing Models." You do not want to name this page after your project name because each page within Confluence must have a unique name.
Your Space within Confluence should be named after your project, and each blueprint page within that Space is named according to the function (ex: "Pricing").
Special instructions on how to complete the Pricing blueprint are shown only while in "Edit" mode and are highlighted.
These instructions will not appear on the main page or in an exported PDF or Word version of your document.
Sections of the Pricing Blueprint
This section should be completed last.
Using the models below (highest price, medium price, lowest price), determine the ideal mix of revenue and profitability for your proposed project. Enter the chosen price information in this table.
Add as many rows as needed to include all of your proposed products in this project. If you have a large number of proposed items (9+), insert a blank row between groups to help the audience understand which items go together. The example in the blueprint shows items in units of Kilos. Remember to update all table rows with information specific to your project (including units)
This table will be used by your Pricing Committee or Finance group to approve your pricing proposal.
No product line can be all things to all customers. Many companies offer different versions of the same product at high, medium and low prices with corresponding features or support.
Your task is to determine which pricing strategy you will pursue for this project. If you decide to pursue multiple strategies, each with its product number, features and support, be sure to include those details throughout the Product Management blueprints. It is recommended that one pricing strategy be chosen per project. If you decide to pursue multiple strategies, we recommend that each option be considered as its own project in order to analyze the market conditions, customer profile and revenue potential accurately.
Competitor Price Positions
Using the competitors analyzed in your Competitive Analysis blueprint, gather current information on pricing strategies used by your competitors. Information may come from a website, sales quote, sales team feedback or any other credible source. This table can be a resource later in the project as you continue to document prices. Information captured in this table will highlight any sudden changes as competitors learn of your project and begin to evaluate their price position. Pricing is not a consistent variable - keep logging price information for different regions, markets and customers over time to look for trends.
Evaluate the options available to price your proposed product
Using a representative set of products (we suggest 5 or fewer), model the revenue and profitability forecasts at a high, medium and low price point.
To establish a price ceiling, a clear understanding of a product's benefits for its customers is essential. The value of some benefits, such as savings on raw materials, can be measured easily. But others, particularly process and relationship benefits such as online purchasing options or brand reputation, must be evaluated through market research. Determine the ceiling price using conjoint analysis or perception mapping.
The Moon Rock example shown in the table makes the assumption of price elasticity = you will sell more units as the price decreases although at reduced profitability.
The example is not intended to be a financial model. You need to understand your specific market dynamics to determine price elasticity of your product.
For example, if you raise the price by 5%, will you sell the same number of units? 5% more? 10% more? 5% less? 10% less?
You can estimate the price elasticity curve by comparing other products in your portfolio against competitors.