Next Big Thing: Guide on How to Create New Products and Services

Apr 7, 2017 · 3 min read

All of us want to create the “next big thing.” What if that desire could be used on your current goods and services? If you’re at a standstill with your current product and pricing strategy, perhaps tiered (or volume) pricing could work for your small, medium or large business. It could also lead to new product development, creating ways of thinking you may not otherwise have thought of for your market.

Tiered pricing allows a company to price a product or service at very specific price points, from lowest to highest. It is your internal product chain of command. Some benefits of tiered pricing, with relation to product development ideas and creating new products, include the following:

• Your company has the potential to make more money. Offer low, medium and high pricing to appeal to everyone.

• Your company’s products and overall brand will reach more households, which increases the size of your audience. You will build your customer segments.

• You don’t have to spin your wheels with new product development as often. You will be able to tweak your current products’ pricing strategies and structures.

• If a customer purchases a product at its lowest price point, he or she could likely upgrade to a higher plan in the future.

• Your customers will get to make their own choices. They know what they need and can afford. They will feel more comfortable with tiered pricing because they perceive their own senses of value of the product.

Companies such as Dropbox, GoDaddy, Hootsuite, Google, Spotify, UPS, FedEx and countless other international companies employ successful tiered-pricing structures, to increased availability of products for more money per month or a “best value” discounted offer if a customer decides to pay annually instead of monthly. In essence, you have to create the perception that your goods or services are of a certain quality and implement a sense of urgency. An example would be, “Act now to get our monthly subscription for only $9.99 per month until April 1. That’s 50% off!” And we have all heard, “But, WAIT! There’s more!”

If you are in the new product development stage, then create a product that will be scalable. For example, some airlines unbundle their plane flights, which provides more options for customers to choose their own products. Businesses, such as cell-phone, cable and other companies, offer basic packages with upgrades to appeal to a wide section of their audiences. Some companies even bundle communications services (phone, Internet and television) to provide savings for their customers but also increase their revenues over time.

In addition, take product development ideas straight to the people who matter to your business — your customers. Offering a 15-minute survey, focus group or social-media post to ask their opinions not only builds loyalty but helps you gauge what will resonate with your consumers. Companies want to know how they’re faring with their customers, and this a valuable way to benefit both the company (with research) and the consumer (with a sense of ownership in the company’s decision making). Also, this allows tiered (or volume) pricing structures to be easily modified either over time or in a quicker time frame.

Written by

Profitkoach is a small business growth specialist based in Melbourne, Australia. Brian Bijdeveldt founded Profitkoach back 2005.

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