What's in a price? How to price your products and services

What's in a price? How to price your products and services

So you have something new to sell: maybe your first book or a hip new SaaS. How do you decide the price? How do you know you're not overpricing? Or underpricing? Why, oh why, did you ever think to sell something?!

Instead of choosing a number by looking inward at your costs, you can use what programmers use best: an abstraction! You'll learn a model for picking the right price for your product and what that price communicates so you can confidently price your next great invention. You'll leave with an actionable list of next steps for pricing your future projects.

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Michael Herold

April 18, 2018
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Transcript

  1. 3.
  2. 7.
  3. 8.
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  6. 11.
  7. 12.
  8. 17.
  9. 18.
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  11. 34.
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  25. 54.
  26. 55.
  27. 56.
  28. 70.
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  30. 80.

    At what price do you begin to think the product

    is so inexpensive that you would question its quality?
  31. 81.

    At what price do you begin to think the product

    is a great deal for the money?
  32. 82.

    At what price do you begin to think the product

    is getting expensive, but you still might consider it?
  33. 83.

    At what price do you begin to think the product

    is too expensive to even consider?
  34. 84.
  35. 90.
  36. 96.
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  38. 101.
  39. 102.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  40. 103.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  41. 106.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  42. 107.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  43. 111.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  44. 112.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  45. 113.

    cheap = [1.22, 9.99, 4.88, ...] scale = (0.5..10).step(0.5) #=>

    [0.5, 1.0, 1.5 ...] scale.map { |x| cdf(x, observations: cheap) }
  46. 114.

    cheap = [1.22, 9.99, 4.88, ...] scale = (0.5..10).step(0.5) #=>

    [0.5, 1.0, 1.5 ...] def cdf(x, observations:) end scale.map { |x| cdf(x, observations: cheap) }
  47. 115.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  48. 116.

    A function where the right-hand side is equal to the

    probability that a random variable is less than or equal to x.
  49. 117.

    cheap = [1.22, 9.99, 4.88, ...] scale = (0.5..10).step(0.5) #=>

    [0.5, 1.0, 1.5 ...] def cdf(x, observations:) end scale.map { |x| cdf(x, observations: cheap) }
  50. 118.

    cheap = [1.22, 9.99, 4.88, ...] scale = (0.5..10).step(0.5) #=>

    [0.5, 1.0, 1.5 ...] def cdf(x, observations:) count = observations.select { |obs| obs <= x }.count end scale.map { |x| cdf(x, observations: cheap) }
  51. 119.

    cheap = [1.22, 9.99, 4.88, ...] scale = (0.5..10).step(0.5) #=>

    [0.5, 1.0, 1.5 ...] def cdf(x, observations:) count = observations.select { |obs| obs <= x }.count count / observations.count.to_f end scale.map { |x| cdf(x, observations: cheap) }
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  53. 121.
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    Image Credits 1. Business Model icon by Thomas Knopp, from

    the Noun Project. 2. Cricket by Ed Harrison, from the Noun Project. 3. Supply and Demand by Davo Sime, from the Noun Project. 4. Partnership by Vectors Market, from the Noun Project.
  87. 191.

    Reference Van Westendorp, P. (1976) "NSS - Price Sensitivity Meter

    - A new approach to understanding consumer perception of price." Proceeedings of the ESOMAR Congress.