All Roadmaps Lead to Pricing

5849712695_1f41c8fbc2_zThis month’s activity of the month is Roadmaps.  You might be wondering how that relates to pricing.  It really depends on how you look at pricing.

The obvious relationship is that as we plan for new products, we should understand how much value they will deliver in the market and hence what price we should be able to charge.  Before committing to a new project, we should have profit estimates, which of course requires a price estimate.

However, when you look deeper into both the concepts of pricing and roadmaps, you have the opportunity to make much better future product decisions.

First, when we think about pricing early then only products that deliver a lot of value to the market make it onto the roadmap. How often do we create products and then try to figure out how much to charge?  If you understand how your market perceives value, it makes it much easier to realize what you need to build.  Pricing should directly influence future products.

Second, clearly understanding pricing strategies should at least partially drive our roadmap.  For example, do we create separate products targeted to different market segments?  Different market segments have different willingnesses to pay.  We probably should.  We can’t create them all at once.  We need to prioritize market segments and add them to the roadmap based on this priority.

Another powerful pricing strategy is good, better, best.  If we choose to use this strategy, we need to clearly articulate what each version does and where each one fits on the roadmap.

Another pricing strategy that’s clearly related to roadmaps is complements.  Once we’ve won customers in the competitive marketplace, we can often sell add-ons at much better margins.  These add-ons, or complements, are extremely valuable and profitable.  They need to be prioritized and placed on the roadmap if we want to create them.

Hopefully you see that roadmaps and pricing are tightly intertwined.  It’s foolish to create a roadmap without understanding the pricing of the items on the roadmap, and it’s powerful to use pricing concepts when deciding which products belong on the roadmap.

So the title of this article isn’t really true.  Actually, the opposite is.   Pricing should lead to all roadmaps.  Does yours?

Photo by Moyan Brenn