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Substitute Pricing Template

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

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It’s not just about comparing your product with direct competitors; it’s about exploring all possible options users might turn to when solving the problem your product addresses. By identifying these substitutes, you gain deeper insights into your customers' needs, values, and preferences.

For example:

Uber competes not just with other ride hailing apps like Ola but also with public transport, owned vehicles, or even bicycles.

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Netflix: Faces substitutes like cable TV, YouTube, and DVDs—not just other streaming platforms.

Why does it matter?

Understanding substitute pricing helps businesses:

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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.

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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

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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.

Frequently asked questions

What is a Notion template?
A Notion template is any publicly shared page in Notion that can be duplicated. They allow you to duplicate other workflows and systems that you want to use.
How to duplicate a template?
After your purchase, you will receive a template link. Open the link, then click on duplicate on the top right corner, then choose the workspace you'd like to duplicate into. If you're logged out or don't have a Notion account, you'll be prompted to sign in or create one first.
Do I need to pay for Notion to use a template?
No. You will just need a free account plan in Notion to use a template.
Why should I consider substitutes outside my direct competitors?
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.
How does this framework help me price my product?
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.
Can this framework help with free-to-paid conversion?
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.
What’s the biggest takeaway from using this framework?
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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