After getting executive buy-in for a major pricing change, Shipt's biggest challenge was marketing. They had to simplify a complex message about eliminating markups for a specific member segment, make it compelling, and navigate legal requirements, which required extensive message testing and collaboration.
When pitching new marketing initiatives, supplement ROI projections with research demonstrating a clear audience need for the content. Framing the project as a valuable service to the customer, rather than just another marketing tactic, is a more powerful way to gain internal support.
Treating pricing as a "set it and forget it" task is equivalent to ignoring user feedback on a core feature. It must be continuously monitored and iterated upon based on feature adoption, delivered value, and market changes, just like any other part of the product.
Product marketers often struggle to prove direct ROI. By influencing pricing strategy, they can make a tangible and measurable impact on revenue and ARR. Pricing is a form of value communication—a core PMM competency—making it a natural area for them to lead and demonstrate their contribution to the bottom line.
Customers don't care about your P&L or that a competitor is a "side hustle." To justify a higher price, you must clearly communicate tangible benefits like better organization, time savings, or superior staff, which directly improve their experience.
Shipt identified markups, fees, and tips as a key driver of churn. Since tips and some fees were unavoidable, they strategically focused on eliminating markups—the one component of the cost structure they could directly control—to create a powerful competitive advantage.
The decision to offer zero-commission trades was not an incremental price reduction; it was a fundamental shift in the business model. The team intuitively recognized that "free" possesses a unique marketing power far stronger than a nominal fee. This is key for any company aiming for mass-market disruption.
By removing markups for premium members, Shipt's traditional Customer Lifetime Value (CLV) calculation became obsolete for this segment. This forced the company to fundamentally rethink how it defines and measures the value of its most engaged customers beyond per-order revenue.
Effective pricing is not just a number; it is a value story. The ultimate test is whether a customer can accurately pitch your product's pricing and value proposition to someone else. This reframes pricing from a simple number to a compelling narrative.
Rather than a universal price adjustment that would upend its business model, Shipt tested its "no markups" initiative within its Target Circle 360 membership. This limited financial exposure, targeted high-value customers, and created a powerful incentive for membership renewal and engagement.
When increasing prices, the communication strategy should be direct and confident. If you truly believe the product delivers value commensurate with the new price, there's no need to hide the change. Evasive language or trying to 'shy away' suggests you doubt your own product's worth.