I made a big pricing mistake on my first startup.
The business was a women’s intimate apparel brand with eco, size-inclusive products, and we scaled mainly through Instagram.
Sales growth was healthy, but I wanted things to grow faster. Our annual one-day sale was always the most successful day of the year, and I noticed occasional social media comments saying prices were too high.
I decided we would lower prices by 10-15%, and these anecdotes were all the evidence I needed that this was the right decision.
Did our sales increase? Yes—for two weeks. Then they dropped to the same volume as before, so we were selling the same number of units, and now less profitably.
After a few sleepless nights, I reached out to a third party analytics company. They charged us what felt like an arm and leg to analyze our customer information, but it was completely worth it because we learned an invaluable lesson.
As it turned out, our most loyal customers (15% of our customer-base) were in the top 2% wealthiest women in the country.
Lower prices didn’t serve my super fan customer. She needed world-class service, faster delivery and in-person experiences, and she was willing to pay more for it.
There are several lessons here:
Know your most valuable customer and serve them.
Make data-driven decisions and avoid founder bias.
Brand fans on social media and your best customers might be different cohorts.
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