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.
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It’s not just about Price.
It’s about environmental
scanning, business
modeling & sustainability.
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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.
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Mass is not a
business model.
Price products so that
every product or service
sale makes sense.
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The 7 Pricing Forces
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First, understand the
Players in the Market
Don’t say you have no competition.
You just sound naïve or silly.
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Second, understand
Your Prospects
Knowing their pain and the benefits
of solving those pains helps you know
how to set your price.
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Third, understand
Your Positioning
You only have three choices –
cheap, competitive, or classy.
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Fourth, understand
Your Profit Margin
Know what your “floor” is, so you can
decide if you need to change other
parts of your model.
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Fifth, understand
Your Product Strategy
Will you sell add-ons? Will your
product have a network effect?
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Sixth, understand
Pricing Psychology
Learn what says “premium” and what
says “discount” and leverage it.
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Seventh, evaluate any
Problems with Pricing
Sometimes the price isn’t what’s wrong
and lowering prices won’t help you.
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Special Cases
with Pricing
• Calculating Hourly Rates
• Project-based Pricing
• Scope Creep
• Premium Segments
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