Career Growth

What Every Marketer Needs to Understand About Price Point

Janessa Lantz
July 11, 2022

This is a guest post by Janessa Lantz, the VP of Marketing at dbt Labs. You can connect with her on LinkedIn here.

If I could travel back in time and give myself one piece of marketing advice, it would be this: Learn about how price point influences your marketing strategy.

Sure, I knew that price was one of the “4 Ps of Marketing”, but it was years before I internalized the why. As a result, I expended a lot of energy on marketing work that would never create results for the business. This is a common mistake marketers can avoid by understanding how price point influences strategy.

Marketing-led vs. sales-led

My first job out of college aligned with the rise of inbound marketing. I read every single word that HubSpot produced. I was hooked. Create content based on high-volume keywords in our general space. Add an offer on the content to capture leads. Nurture those leads and convert. Let’s go.

In reality, I struggled to build any kind of traction and was never able to prove the ideas. And I just couldn’t figure out why. Everyone said this was the way!

In retrospect, my plan was completely misaligned with how the company actually sold its product. The company was selling mid-six-figure consulting projects with some light software capabilities thrown in. This was an expensive contract that required a long, highly consultative sales process.

Three listicle posts a week with a lead capture form was never going to work. What did work was outbound outreach to companies matching our ideal customer profile. We offered to walk them through our annual research report and gave custom advice based on what we knew about their business and industry.

Example #1: How price point impacts content strategy

Animalz wrote a great post about this a few years ago called The Marketing Executive’s Guide to Content Strategy:

“Using Animalz as an example, ranking for “what is content marketing” would drive plenty of top of funnel traffic, but those readers are likely not in the market for a content agency that advises on high-level strategy. Creating niche content for marketing execs, on the other hand, drives very qualified traffic.”

What Jimmy is talking about in this post (even though he doesn’t explicitly say it) is price point. If you have a freemium product with a $50 per seat starting price, you can put time into earning those top-of-funnel search spots. The affordability of your product means you are targeting a larger market.

But if you’re selling high contract value deals with 12-month and longer sales cycles, you have a smaller market that will likely benefit from a more targeted, sales-led approach.

A blog that gets 5 million pageviews per month might impress a lot of other marketers, but it is unlikely to impress your CEO in this case.

Example #2: How price point impacts community strategy

Let’s look at another hot topic right now – community. Dave Gerhardt invited me onto his Exit5 podcast recently (episode here) and we ended up on a fun thread about what kind of businesses should invest in community.

Dave’s argument is that every business benefits from a community play. He’s got a point! But since marketing is all about tradeoffs, let’s think about where we might get the highest return.

The example we explored was Boeing. Would Boeing benefit from a community play? It certainly wouldn’t hurt! But at the price point they’re working with, you would likely get a higher return hiring an ex-American Airlines executive and paying them a ton of money to sweet-talk airline executives on your behalf.

The price point of a Boeing jet is so high that the cost of your ex-airline executive’s salary would be covered many times over in a single sale.

I’m making some sweeping statements here, and there is a lot of nuance around the particulars of a given business – it’s not just price point. It’s also the complexity of the sale, the competition, the size of the market, the potential lifetime value of the customer.

So hopefully by this point, I’ve made my foundational point. Now let’s try to put this into a framework that you can apply to your own work.

A framework for go-to-market strategy

This is the blog post that made the intersection of price point and marketing strategy click for me: A Framework For Go-To-Market Strategy. Here is my summarized view:

If you’re wondering what I mean by marketing-led, product-led, and sales led, these are not just made up words. Here’s a great primer on each of these motions and the associated price points.

Large audience, low price point

If you’re selling a product with a huge base of potential users at an accessible price point, you want to look for marketing strategies that are highly cost-efficient. Ranking in search will pay off well for you.

Small audience, high price point

If you’re selling a more expensive product with a smaller base of potential users, you’ll be in sharpshooting mode. You’ll likely have a target account list and be working closely with your sellers on account-based marketing.

Suggested questions to ask yourself:

If you’re currently happy in your role, it’s worth spending an hour or two thinking about where your company lands on price point and sale complexity:

  • Are you selling a high or low price point product?
  • Do you understand the complexity of your sales process?
  • Is your company more marketing, sales, or product-led? Based on your price point, do you think you are using the correct marketing strategy?

You can ask your CFO for 30 minutes of their time to walk you through customer acquisition costs and how they think about marketing investments. Take a hard look at where you spend your time and if the marketing you’re producing aligns with your price point.

If you’re considering your next career move, it’s worth thinking about the price points, and associated go-to-market strategies that best align with your unique skill sets and interests.

If you learn something or this sparks a new thought for you, I hope you’ll send me a note on LinkedIn or shoot me a Twitter DM and tell me about it!

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