Pricing

The 7 Forces to Factor into your Pricing Decisions

Transcript

1. PRICING 7 forces to factor into your thinking
2. There are 30-40 pricing experts on the planet. I’m not one of them. My name is Chris Lema and I’ve been building hosted web-based software (SaaS) since 1994. When it comes to pricing, I’ve just made lots of mistakes.
3. It’s not just about Price. It’s about environmental scanning, business modeling & sustainability. 1
4. It’s not about Demand Curves. You need too many prices. You need to offer them too long. You need no one else to know. 2
5. Mass is not a business model. Price products so that every product or service sale makes sense. 3
6. The 7 Pricing Forces 4
7. First, understand the Players in the Market Don’t say you have no competition. You just sound naïve or silly. 5
8. Second, understand Your Prospects Knowing their pain and the benefits of solving those pains helps you know how to set your price. 6
9. Third, understand Your Positioning You only have three choices – cheap, competitive, or classy. 7
10. Fourth, understand Your Profit Margin Know what your “floor” is, so you can decide if you need to change other parts of your model. 8
11. Fifth, understand Your Product Strategy Will you sell add-ons? Will your product have a network effect? 9
12. Sixth, understand Pricing Psychology Learn what says “premium” and what says “discount” and leverage it. 10
13. Seventh, evaluate any Problems with Pricing Sometimes the price isn’t what’s wrong and lowering prices won’t help you. 11
14. Special Cases with Pricing •  Calculating Hourly Rates •  Project-based Pricing •  Scope Creep •  Premium Segments 11
15. Questions?