FREE TEMPLATE

Substitute Pricing Template

Identify substitutes to optimise pricing

The Substitute Pricing Framework is a strategic tool designed to help businesses understand the alternatives their customers might consider instead of their product.

GrowthX

GrowthX

This is built for

Pricing Strategists

Analyze market alternatives, including indirect substitutes, to inform pricing decisions. Identify product differentiation opportunities based on value drivers.

Product Marketers

Position the product effectively against substitutes. Use insights to refine messaging and highlight unique value propositions to target segments.

Business Analysts

Evaluate substitutes based on cost, effort, and flexibility. Provide data-driven recommendations for optimal pricing and positioning strategies.

Why does it matter?

Understanding substitute pricing helps businesses: ‍ 1. Identify key value drivers: Learn what aspects of your product—convenience, affordability, or unique features—customers value most. 2. Spot opportunities for differentiation: Determine where your product excels compared to substitutes and leverage that to refine your messaging or features. 3. Position pricing strategically: Use insights from substitutes to determine whether your product is premium, budget-friendly, or appeals to a mix of customers. ‍ By focusing on substitutes, this framework enables businesses to set prices that align with customer expectations while staying competitive in the market.

How to use the substitute pricing framework

‍ A. Map out substitutes: Use the framework to identify alternatives your users might choose. Think beyond direct competitors to include options outside your category. B. Evaluate substitutes: Analyse each substitute based on factors like flexibility, effort, and cost to see where your product stands out. C. Position your product: Based on your analysis, determine whether your product is best positioned as a premium, budget-friendly, or hybrid solution. D. Iterate and test: Use your findings to run pricing experiments and refine your strategy over time.

Substitute Pricing Template

Identify substitutes to optimise pricing

Download Substitute Pricing Template

  • Identify direct and indirect substitutes.
  • Understand customer value drivers.
  • Evaluate substitutes on key factors.
  • Position your product's pricing strategically.
  • Iterate pricing based on insights.

Frequently Asked Questions

Because users don’t just compare your product to others in your category—they also look at other ways to achieve the same outcome. For example, Uber isn’t just competing with Ola; it’s also competing with public transport and owned cars.
It shows you what customers value most in your product compared to substitutes. If your product offers superior convenience, you might position it as a premium choice. If it’s cost-effective, you might appeal to price-sensitive users.
Yes! By identifying what users value and where your product excels, you can tailor freemium features or trial upgrades to address these specific needs, encouraging conversions.
It helps you understand what your customers are actually paying for—whether it’s convenience, affordability, or a unique feature. These insights allow you to price strategically and stand out in the market.

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