It occurred to me today that perhaps the most commercially important on the subject of the relevance of growth hacking to traditional business, a piece in Harvard Business Review by pricing guru Rafi Mohammed which examines the popular ‘ridesharing’ startup service Uber, and its growth hacking style approach to pricing and whether that works or not in the marketplace (he suggests it needs some serious tweaking). But rather than focus on Uber I want to focus on Rafi’s blog whether there’s a simple explanation of understanding pricing through the eyes of the customer:
“The key to better pricing involves setting prices that capture value. Manhattan street vendors understand the principle of value-based pricing. The moment that it looks like it will rain, they raise their umbrella prices. This hike has nothing to do with costs; instead it’s all about capturing the increased value that customers place on a safe haven from rain.
“The right way to set prices involves capturing the value that customers place on a product by “thinking like a customer.” Customers evaluate a product and its next best alternative(s) and then ask themselves, “Are the extra bells and whistles worth the price premium (organic vs. regular) or does the discount stripped down model make sense (private label vs. brand name). They choose the product that provides the best deal (price vs. attributes).”
And therefore reading between the lines, coupled with the Uber piece, this suggests a pricing strategy for an existing business, adopting a growthhacking data-driven more dynamic approach to pricing, could potentially yield significant commercial benefits. I’ll no doubt come back to this subject and add more thoughts as and when I find useful info/insights. For now see my original blog post on Chinwag which sparked this train of thought to see where I’m coming from: Why ‘Growth Hacking’ Isn’t Just For Startups