PIC PIC Pricing and Monetization Strategy 2 — Questions and Answers
Question 1: What does 'price elasticity of demand' measure?
- How quickly prices can be changed in the market
- The sensitivity of demand to changes in price (Correct answer)
- The cost to produce one additional unit
- The maximum price the market will accept
Correct answer: The sensitivity of demand to changes in price
Price elasticity measures how much the quantity demanded changes in response to a price change — high elasticity means demand is very sensitive to price.
Question 2: Which of the following is a common pitfall when setting prices for a new B2B SaaS product?
- Conducting customer interviews about budget
- Anchoring price too closely to internal development costs (Correct answer)
- Testing multiple price points with segments
- Analyzing competitor pricing structures
Correct answer: Anchoring price too closely to internal development costs
Cost-based pricing ignores customer value perception and market conditions, often resulting in underpricing or misaligned positioning.
Question 3: What is 'bundling' as a monetization strategy?
- Offering products individually at a discount
- Packaging multiple products or features together and selling them as a combined offering (Correct answer)
- Charging separately for each feature used
- Licensing technology to third-party resellers
Correct answer: Packaging multiple products or features together and selling them as a combined offering
Bundling increases perceived value and average deal size by grouping complementary products or features into a single purchase.
Question 4: According to Pragmatic Institute principles, who should own the pricing decision for a product?
- The finance team alone
- A cross-functional team led by product management with market input (Correct answer)
- The sales team based on deal feedback
- The executive team based on revenue targets
Correct answer: A cross-functional team led by product management with market input
Pricing should be a cross-functional effort led by product management, informed by market research, finance, and sales data.
Question 5: What is a 'land and expand' monetization strategy?
- Launching in one country before expanding globally
- Entering accounts with a small deal and growing revenue through upsells and expansions (Correct answer)
- Offering a perpetual license that expands feature access over time
- Reducing prices to land in competitive deals and raise them later
Correct answer: Entering accounts with a small deal and growing revenue through upsells and expansions
Land and expand starts with a low-friction initial sale to get into an account, then grows revenue by expanding usage, seats, or modules.
Question 6: Which metric best indicates whether your pricing is aligned with the value customers receive?
- Gross margin percentage
- Net Promoter Score (NPS)
- Customer willingness-to-pay research and price sensitivity analysis (Correct answer)
- Time to close a sales deal
Correct answer: Customer willingness-to-pay research and price sensitivity analysis
Willingness-to-pay research and price sensitivity analysis directly measure whether your price matches customer-perceived value.
PIC PIC Pricing and Monetization Strategy 2
What does 'price elasticity of demand' measure?