fbpx

LETS GET DOWN TO BUSINESS.

Question :
We had such great help with a question earlier that I thought I might try my luck again. This time with pricing. We have developed software and hoped to charge subscription fees rather than high sales commissions. Our goal was to make our services and product affordable for all, but seems others believe our prices could be too low, stabbing ourselves in the foot. We have completely funded ourselves through freelance and other means but do in future need to make a profit to expand our team and increase business reach. Any advice on how we can calculate fair costings?

Question submitted 18/07/20 @ 07:00am
Industry: Digital and Technology
142
VIEW
0
VOTE
  • Morena – pricing is illusory in many cases, and can almost be illogical depending on the experience, outcome and supply. To break it down a bit, it is much harder if you have no historic custom, because if you do have customers then you can interview them and understand the buying experience, their actual experience and the value they got, and then understand whether the pricing was ‘low’ ‘ok’ or ‘too high’ – and then use that to test new potential customers as you move forward.

    The basic premise is ‘did your customer get value’ for what they received and what did they think of the price they paid – if you can get some insights on this work it may help.

    Further, comparing your service/software/outcome to competitors who are offering something similar will also help you understand what your pricing could be or needs to be.

    Note, I have never yet talked about costs or margins – I figure it is better to start with your users, your customers and potential customers – learn about them and what they expect and/or enjoy – learn about conversion and then look back at your costs and work out ‘can we make money in this framework’.

    Also, if you have a completely different product or experience that has no comparables, then the only way you can work out pricing is by conducting tests and undertaking trials in the market with different sets of prospects – to learn, and then once you have enough evidence then you can start rolling that out – and then learning as you go, and tweaking if necessary for different users. Once you get users/customers through, once you get more word of mouth, then they tell others and you get referrals – which you can build repeat business off.

    I don’t feel I have really given you an answer – I would just think about ‘test and learn’ on pricing – and that means doing lots of different testing, comparing to others – and just living ‘in the micro’ of the interactions to get your pricing framed up and working. Good luck.

    Hi,

    I spent far too long trying to answer this question. You really can research yourself to death and then have to run your profit scenarios.

    Here is my very basic view…

    If it is a consumer offer and really compelling, $7 to $10 per month is a ballpark subscription
    If it is a corporate offer and really compelling, $3 to $5 per month is a ballpark subscription

    Then test it out.

    Cheers

    Looks like you have had some great advice already.
    My one observation… its harder to charge more in the future, than go back later and charge less. It’s a logic I initially struggled with 🙂
    Go well! JT

  • You must be logged in to reply to this topic.