Go-to-Market Plays #12: How to Price Your Product

Summary

Podcast Summary: The Marketing Millennials – Episode: Go-to-Market Plays #12: How to Price Your Product

Release Date: June 25, 2025
Host: Daniel Murray
Guest: Tamara Graminski, Former VP of Product Marketing at Kajabi and Unbounce, Founder of PMM Camp

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Introduction to Pricing Strategies

In the 12th episode of The Marketing Millennials, host Daniel Murray delves into the critical topic of product pricing with guest Tamara Graminski, a renowned product marketing expert. The discussion aims to equip marketers with actionable insights to determine optimal pricing strategies that resonate with their target audience.

Common Pricing Pitfalls

Tamara highlights two prevalent mistakes companies often make when setting prices:

1. Competitor-Based Pricing: Simply mirroring competitors' prices without considering unique product value.
2. Arbitrary Pricing: Selecting a random price point without validation, often leading to stagnant pricing for extended periods.

She emphasizes that neither approach effectively aligns pricing with customer perception or product value.

Tamara Graminski [02:36]: "Companies will look around what their competitors are doing and then just assume they should be charging the same thing. Or they'll just throw out a number, put it on the pricing page and hope for the best. And honestly, neither of those methods are very good."

Validating Pricing Through Customer Insight

Daniel underscores the importance of moving beyond guesswork to validate pricing with actual customer insights. Without validation, fixed pricing can lead to customer objections and reduced sales effectiveness.

Daniel Murray [02:36]: "If you don't pressure test your pricing, your customers will in turn objections and goes to demos. So we're here to stop guessing and start validating."

The Van Westendorp Pricing Test

Tamara introduces the Van Westendorp Pricing Test as a robust framework for determining an acceptable price range based on customer perceptions. This method allows marketers to identify a "Goldilocks" price that is neither too high nor too low.

Key Features of the Van Westendorp Test:

1. Simplicity: Requires only four critical questions, making it accessible without the need for specialized expertise or software.
2. Customer-Centric: Gathers genuine customer feedback on pricing, reflecting perceived value and willingness to pay.
3. Flexibility: Can be easily implemented using basic survey tools and analyzed with simple spreadsheets.

Tamara Graminski [03:42]: "The Van Westendorp helps you identify your product acceptable price band, which is basically what customers perceive as too cheap, too expensive and just right. Kind of like the Goldilocks method."

Implementing the Van Westendorp Test

Step-by-Step Guide:

1. Identify Target Audience: Focus the survey on ideal customers or those who closely match your target demographic to ensure relevant feedback.

   Tamara Graminski [06:20]: "You want to target your ideal customers... Be intentional and curate that list."

2. Design the Survey: Incorporate the four essential questions, often utilizing sliders for respondents to indicate their price perceptions.

   • At what price would you consider the product too expensive to buy?
   • At what price would you start to perceive the product as expensive, but still consider purchasing?
   • At what price would you consider the product to be a great deal?
   • At what price would you perceive the product as being too cheap, potentially questioning its quality?

3. Distribute the Survey: Send the survey through targeted channels, ensuring it reaches the right audience without broad generalization.

4. Analyze the Data: Plot the responses on a graph using cumulative percentage curves to identify the intersections, revealing the optimal pricing window.

   Tamara Graminski [05:58]: "When you plot the responses to those four questions... you're going to get a pricing window that shows exactly where perceived value and willingness to pay overlap."

5. Determine the Optimal Price Point (OPP): Identify the midpoint within the acceptable price range where the majority of customers feel the price is just right.

Understanding the Price Points

Tamara elaborates on the four critical intersections derived from the Van Westendorp test:

1. Point of Marginal Cheapness: Below this price, the product may be perceived as low-quality.
2. Point of Marginal Expensiveness: Above this price, customers may consider the product overpriced.
3. Indifference Price Point: Where customers view the price as reasonable without strong feelings.
4. Optimal Price Point (OPP): The ideal price where the highest number of customers feel the price is fair.

Tamara Graminski [08:06]: "The optimal price point... is where the greatest percentage of people think the product is neither too cheap nor too expensive."

Practical Application and Frequency

Daniel inquires about the frequency of conducting pricing tests to adapt to evolving market conditions. Tamara advises:

• Initial Setup: Conduct the Van Westendorp test before setting initial prices.
• Ongoing Assessment: Re-evaluate pricing at least once a year or when significant changes occur, such as launching new products or entering new markets.

Tamara Graminski [10:13]: "If some major things have happened in your company... those are all great signals that you should go back to the drawing board on pricing to see if something needs to change or not."

Conclusion and Final Insights

The episode wraps up with a reaffirmation of the importance of data-driven pricing strategies. Tamara encourages marketers to adopt the Van Westendorp test to gain concrete insights into customer perceptions, thereby eliminating guesswork and fostering more effective pricing decisions.

Daniel Murray [11:32]: "The Van Westendorp test gives you something way better. A pricing range that's actually backed by customer insight."

Key Takeaways

• Avoid Common Pitfalls: Steer clear of competitor mirroring and arbitrary pricing.
• Embrace Customer Feedback: Utilize structured methods like the Van Westendorp test to gather meaningful pricing data.
• Implement Systematically: Follow a clear, step-by-step approach to conduct pricing surveys and analyze results.
• Stay Adaptive: Regularly revisit pricing strategies to align with market dynamics and business growth.

Notable Quotes

• Tamara Graminski [02:36]: "Neither of those methods are very good."
• Daniel Murray [02:36]: "We're here to stop guessing and start validating."
• Tamara Graminski [03:42]: "It's like the Goldilocks method."
• Tamara Graminski [05:58]: "You're going to get a pricing window that shows exactly where perceived value and willingness to pay overlap."
• Daniel Murray [08:06]: "It's the Goldilocks price that we talked about."

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Transcript

[Daniel]

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We are back with another Go to market play in 10 minutes or less. And today we're talking about pricing. A couple weeks ago we broke down price anchoring and how to influence perception by introducing comparison points. And today we're zooming out and asking the bigger question, how do you actually determine what your product should cost? And to do that, I got the pricing queen some arguments he backed with me. She's the former VP of Product marketing at Kajabi and Unbounce and the founder of PMM Camp. Welcome back, Tamara. Thank you for being here.

[Tamara Graminski]

Thanks, Daniel. Pricing, as you know, is one of my favorite go to market topics. So I'm really happy we've made room for this one. And you had said bring a topic that you feel like you're the best at and this is one of them. In fact, I'm actually such a pricing nerd that I actually built an entire course about it with the Product Marketing Alliance a few years ago. So yes, this is my jam now. Across all of my pricing work, I've seen the same patterns come up time and time again. And I'll see that either companies will look around what their competitors are doing and then just assume they should be charging the same thing. Or they'll just throw out a number, put it on the pricing page and hope for the best. And honestly, neither of those methods are very good.

[Daniel]

Yeah. And then suddenly like in a meeting, you someone says, okay, like let's make $49. And then now that price becomes sacred. Nobody wants to mess with it. It'd be it gets stuck for 12 months. But here's the thing. If you don't pressure test your pricing, your customers will in turn objections and goes to demos. So we're here to stop guessing and start validating. So how do we actually get to a price that makes sense tomorrow?

[Tamara Graminski]

That's a great question. And I love that you mentioned kind of pressure testing with the audience, because that's what happens when you put a price out in the market. But I believe we can actually test with the audience ahead of time to find a range that makes sense for them. So the framework that I'm going to walk you through today is called the Van Westendorp pricing test.

[Daniel]

I know you're moving to London and now you're becoming all British and European. So that sounds very fancy and intellectually sounding, but I want you to break it down because that is a big name for me. So what is this test? Why is this test so useful?

[Tamara Graminski]

Yeah, the reason I love this test is that it's perfect for marketers like, you do not need to be a pricing expert or a data analyst to do this. So basically, the Van Westendorp helps you identify your product acceptable price band, which is basically what customers perceive as too cheap, too expensive and just. Right. Kind of like the Goldilocks method. Right. And that's the key here, perceived value. So you're not just asking what someone would pay, you're learning how your pricing affects their trust in your product. And as I mentioned, it's something that we as marketers can actually do ourselves. It's fast, it's low lift, and it's way better than arguing in Slack for a few weeks over that $49 price point. And I just love it because, like, after today's episode, someone can go and run this themselves tomorrow. They don't need any sort of fancy software. They don't need a data analyst to hold their hand at all.

[Daniel]

I feel like this is way too good to be true because you have all these people who spend months and months and years and years just arguing about a single price. So let's just walk through how it works so people can execute this. Sure.

[Tamara Graminski]

So if I asked you to run a pricing test right now, you would probably send a survey to your customers or get a customer on the phone and you would ask them, how much would you pay for this product? Now, that's not a bad question. But the reality is that everyone wants a deal. Like, I want a deal, you want a deal. And so we're going to lowball you. Right? Customers are not going to tell you the truth. And so instead, what the Van Westendorp does is it asks four simple but super powerful questions. It asks, at what price would you feel this product is too expensive to consider buying? At what price would it start to feel expensive, but you would still consider it? At what price would it be a great deal? And then at what price would it feel too cheap that you would actually question the quality of the product? And then what happens is, when you plot the responses to those four questions across a group of customers, you're going to get a pricing window that shows exactly where perceived value and willingness to pay overlap. And what you're looking for is to price your product in the middle of that window. That's basically like the sweet spot.

[Daniel]

I love this. It's like the Goldilocks meets Go to Market, except this time your actual customers are doing a little taste test for you. So there's no, like, guesswork, no boardroom debates, just actual data that speaks to human. But I want to get into the tactical stuff. So how do I actually run this test?

[Tamara Graminski]

Definitely. So it sounds simpler than it is. Yes, you could do it tomorrow, but you also have a few steps. So the first step is you want to target your ideal customers, right? We don't want to just send this out to every single customer or prospect. We want responses from people who are either your ideal customer or could be your ideal customer. So don't just, like, throw this into one email that's going to go to everyone. Be intentional and curate that list. Then what you want to do is you just want to build a survey. And most survey software can be used for this because it's just four simple questions and you can give a little slider with the price range. And you just want to ask the four questions. You can send this as a separate survey, or you can embed it in a survey. Maybe you want to do some feature preference or something else as well. And then all you need to do is you need to take the answers and plot it on a graph. I just use like, Google Sheets for this. Like, again, you don't need anything crazy. And basically you'll plot each of the four responses as cumulative percentage curves to see where they intersect. And if you're ready to actually start running one of these, like, literally, just Google Van Westendorf, because there's a bunch of templates that you can use to just throw your responses in and it will pull this chart for you immediately.

[Daniel]

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So, Tamara, I just want to know, like, what are the importance of those four questions to ask?

[Tamara Graminski]

So the four questions are important because the intersection of those four responses are what we're looking for. And so there's four key points that you're going to get on your graph. The first one is called a point of marginal cheapness. This is basically where too cheap and expensive intersect. And anything below this and people are going to think that the price is like too cheap. They're going to question the quality of the product. Right. The point of marginal expensiveness is where that too expensive and good value line meet. Above this, people are going to feel it's not worth the cost. This is like two premium. The indifference price point is where the good value and the expensive curves cross. And this is the price that feels reasonable to most people. And then that optimal price point, or we call it OPP in the pricing world, that's the sweet spot, as we talked about earlier. That's where the greatest percentage of people think the product is neither too cheap nor too expensive. And this is usually going to fall right in the middle of that acceptable price range that we talked about earlier.

[Daniel]

So you're basically creating a window of acceptable pricing and the optimal price point is right in the middle of that.

[Tamara Graminski]

Yeah, I know it's a lot to take in, but that's exactly right. That's that Goldilocks price that we talked about. Right? Now, I always like to say a little word of warning or something to consider is like the final price you choose should also reflect your positioning. Right? So are you seen as a premium brand or product? Maybe you want to price higher up in that pricing band or if you're going for like more widespread adoption, you want to increase conversion rate, you don't need to be a premium brand. Then you can price lower in the band. So it's not going to give you the exact dollar amount, unlike say a conjoint pricing study would, but it's going to give you a range. Let's say you're trying to figure out if I should charge $70 or $85 at least. You know that like somewhere in that range will be acceptable. And then you can just choose where in it you want to be. And that's also something you can experiment time, right? You can choose your spot in the range and then, and then test from there.

[Daniel]

So question for you. I mean, a lot of people will ask us, like, should I just do this once and never do it again? Should I do how, how often should I do this? Because like we said at the beginning, your brand evolves, you evolve, pricing evolves, your customer base evolves. So you have to, I'm guessing you have to do this more often than people are doing currently. Yeah.

[Tamara Graminski]

I always recommend starting with this exercise so that you can kind of get the right price point set and then launch it, see how the market responds and experiment. But also if some major things have happened in your company, like you're launching a brand new product line or maybe you're entering a new market or something is happening in your market, like a competitor has merged or something like that, then those are all great signals that you should go back to the drawing board on pricing to see if something needs to change or not. If none of those things are happening and your business metrics are solid, then I kind of say at a minimum, once a year, this is a good habit to get into. I like to survey my customers at least once a year anyways. And so this is something you could just throw into a regular customer survey as well, just to make sure that that, like fair price that customer perceives your product to be isn't kind of changing over time.

[Daniel]

Well, that is a wrap, everybody. So if you've been tossing around numbers and praying, the Van Westendor test gives you something way better. A pricing range that's actually backed by customer insight. And you know, leadership loves backed by insight. So it's not just what they'll pay is what they actually believe your product is worth, which is even better. So that's where the real magic happens with pricing. And thank you, Tamara, for bringing her expertise on the podcast again. And until next week.

[Tamara Graminski]

Thanks so much for listening. Keep tuning in to hear more great insights from the coolest marketers from around the world. If you haven't already, make sure to subscribe and follow the Marketing Millennials podcast on Apple Podcasts, Spotify, YouTube or wherever you get your podcast. And if you like what you hear, I would greatly appreciate you giving us a five star rating. It helps bring more marketers into our community.