Jon ManningPricing, Monetisation & Business Model Strategist

I'm an Australian-based, internationally experienced, advisor on pricing, monetization and business models. I have a full time gig in the tech industry (SaaS) and I help start-ups and entrepreneurs with their pricing strategy. I've also done my own start-up, and I'm the author of "Overcoming Floccinaucinihilipilification: Valuing & Monetizing Products and Services". Fancy a chat? Let me know your specific pricing challenges and questions when booking a call. I look forward to helping your soon.

Recent Answers

Rule #1 - forget about cost-plus pricing. Costs are how you measure the effectiveness of your pricing, but shouldn't be use to set prices
Rule #2 - think about value. If you're B2B, work out how you a) increase customers revenue, b) reduce customers costs or c) minimise customers risk (all can be quantified). Then work out what % of the value you want to capture in your pricing.

Here's three tips: 1. Increase the value you provide more than the price. If you want to lift prices by 10%, give 20% more value. 2. Rename you products. This will remove the association with the legacy pricing. 3. Craft an awesome pricing communications strategy. I've had clients that have done both 1 & 2 above, then finished the communication to customers about those changes with the line "we understand if you need to go elsewhere" and they have never lost clients. Good luck!

Probably not enough information to answer this question here, but...
1. the new pricing models sounds like the monthly charge will be variable and unknown. Some buyers won't like this (eg if you're B2B, they won't be able to budget for your costs)
2. Have customers asked for this? Therein, may lie the answer to your conversion rate question
3. There is no rule that says you have to have one pricing model. Launch a secondary model and let the customer choose. You could even consider framing one as a decoy?
Have to chat further if you're interested
Jon Manning

I had the same need 6 months ago. I tried 7 legal firms that called themselves "disruptive start-ups" but they could not provide a) timely services b) a modest amount of customer service c) a fixed price or d) any combination of a) b) or c). In the end I went with an established law firm that did provide a), b) and c) but it came at a cost. You get what you pay for.

You're really going to have to provide a lot more information to get answers to your challenge, or talk to one of us.
If you are in a highly competitive industry where everyone know everyone else's pricing, you need to ask questions about discount management / containment, as list prices are pretty much irrelevant in those sorts of scenarios. Other questions that would help address your challenge include: Are we talking prices points of ~$2 or $20k? Are you selling B2B, B2C or both? Do you have a sales force? Where do you want to position yourself in the market? Would you like to shake up the industry with an alternative pricing model that can't be compared to the competition? If you're selling online, is your website optimised for behavioural economics monetization? The list goes on and on...
I'd get on the blower to one of us if I was you!!!

I think podcasts are a bit like the early paywalls. No one has really worked out the best way to monetize them yet. My recommendation would be to experiment. There is no such thing as a pricing lab. Try something, if it doesn't work, try something else. The Economist recently looked at the topic here:

As Seth Godin once said "If all your customers care about is price, its probably because you haven't given them anything else to care about!"
Get those numbers on bad handling, shipping delays, lost packages and differentiate yourself from your competitors!
Repackage what it is you do, in the way that Orica stopped selling explosives and started selling a rock removal service.
I don't know how many "shipping lanes" you have: if you have many, surely the level of competition differs. Make your money where there is less competition and be competitive where there is more competition. Look at your T&C's as well - can you make them more attractive to help differentiate yourself, or better align them with your clients business model?
Hope that helps - happy to chat and discuss further

If you can win a customer on price, you can lose a customer on price. But its not price, that customers are sensitive to...its value. To answer your question, its important to be in a similar pricing range to your competition if you want to play the pricing game and commoditize your product. But I would argue that the reason you customers care so much about price is because you are not giving them anything else to care about. What do customers value most, communicate that to them, desensitise them to price and sensitise them to value. More than happy to discuss this with you further...Jon

In the 1980's, there was a famous experiment conducted: the "Beer on the Beach" experiment. If you and I are sitting on a beach on a hot day, and I say to you "I'm going to the 5 star hotel at the end of the beach to get us two ice cold much are you willing to pay?" You'd say (in 1980's dollars) around $2.60. I then tell you I've changed my mind and I'm going to the run down grocery store at the other end of the beach and they have exactly the same beer at exactly the same price. How much are you prepared to pay now? You'd say ~$1.50. There is no logical or rational difference in the willingness to pay, other than the context or environment in which the purchase is being made. How do you make yourself the 5 star hotel?

I agree that this isn't really a pricing problem (more value proposition, sales, etc), but pricing may help fix the challenge. There's not enough information provided to give definite answers, but I would suggest a) offering a choice of pricing models (outright purchase & rental immediately spring to mind) b) offering choices within those choices, where applicable (e.g. 12 / 24 / 36 math rentals) and c) creating a decoy product (like the $A24k Apple watch). If someone buys it, great, if not, it makes every other product look great value).
Happy to chat further on this

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