MM-4 1. Have Willingness to pay talk early, you can’t prioritise without it.

When we say price, we mean it to be an indication of what customer value and how much they are willing to pay for that value. Your conversation must be around wtp.

Gillette, laser like focus drove inclusion of only most imp. Feature that were meaningful to our customer, and allowed the product to be offered at an offordable price. It observe them in their home and mall to see what features were must have and which ones are nice to have.

The benifits of early WTP.

• it will tell you right away wether you have an opportunity to monetize your product or not.
  • it will help you to prioritise feature and design the product with right feature.
• it will enable you to avoid four types of failure.

The entire process was driven by inside-out thinking. When company validated this with customer it turned out customer were willing to pay for only 10 out of 25 feature. And facebook feature was nice to have not must have.

THE INFO. YOU NEED FROM THOSE EARLY PRICE CONVERSTAION.
First, you want to understand overall WTP for your product, the price range they would consider resaonable [ infect if they would pay anything ]

Second, you must understand how much value customer place on each features, and what they are willing to pay for that value. This step will help you create the product roadmap. Feature to develop first and so on.

Pilling too much feature was killing the demand by hiding the features that truly matters.

INSIGHT, TIPS, TRICKS.
The simplest way to ask is direct question about the value of your product and its feature.

• what do you think could be an acceptable price?
• what do you think can be an expensive price?
• what do you think will prohibitably expeinsive price?
• would you buy the product at XYZ? And then follow with most powerful question WHY?

You can also ask customer to pick an option. You can show product line up with different price point and feature and ask which one they would choose and why?

THE FIVE METHOD TO ASK WILLINGNESS TO PAY QUESTION:
Direct WTP question - what do you think is an acceptable price, expensive price… this is easiest way to see the WTP of your innovation. It is very powerful in early stage. It will help you understand what market is willingness to pay and if you are completely off-track. You can also run a large scale survey and draw the graph.

Purchase probablity question - show a new product concept, explain value benefit and attach a price. And then ask 1-5. If answer is lower then 5 you reduce the price and ask again. Typically from our benchmark if someone say 5, it is 50% probablity if they say 4 probablity is 10-20%

The most-least question - start with finite set of feature, say 10, then create the subset say 6. And ask the customer to see what feature they value the most and what least, repeat the process 5-7 times. Repeat the process few times. This method help relative priorities, and identify the leader, filler and killer. In a set of feature people can easily identify the extreme.

*Build you own questions - * before you start this, you need to have some idea of your product and feature WTP. Next give customer the list of feature and ask them to build their ideal pridcut but when they add more feature their price increased. Use this package to see what ideal package look like for each customer. You can also test for segment and bundle.

*purchase stimulation - * this is the most advance, you provide customer with a product that has specific feature set and a price. And say if they buy it, next you change the feature and price and ask again.

TEN USEFUL INSIGHT -

• 1. Don’t forget to tap into internal excellence. Before customer, try internal team. And ask them the type of question you ask customer. Send question before meeting to avoid bias in room and they conduct objective analysis why they say that.
• 2. Position the talk as value talk then pricing talk. ”we want to talk about latest innovation and how it can add value to you” “do you value these feature and then ask what would be acceptable price.”
• 3. Valuable insight comes from direct question.
• 4. Make 25% question why? You may get tips and improve the product significantly.
  • 5. Mix it up. Don’t just ask standard question, let it be unstructured some time.
  • 6. Be part of the action. Involve all the key people. Make a cross-decipline team and involved them. -7. Avoid the avg. trap. - instead of avg. price create the 2 products.
  • 8. Don’t rely on quantitative - talking to your customer qualitatively help to create more robust quantitative survey.
  • 9. Be price. Would you buy vs. would you buy this for $20 is completely different.
  • 10. Garbage in garbage out. Don’t treat as market research exercise, asking simple question.