Tag Archives: Product (business)

Pricing Your Products: Aim a Little Higher

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By Justin Reyes

I recently read a book called Double your Freelancing Rate by Brennan Dunn.  While the the book’s primary audience is freelancers, the reasons and strategies provided by Dunn apply to setting a price point for a product.

Dunn discusses two types of pricing models:

  1. One based on features: where a fee is charged for a fixed feature that you offer.
  2. One based on value: where you set a price point based on the value of results that your customer is receiving.

Most startups do #1 , set their prices to match their competitors, or worse yet don’t even price their product for fear no one will buy it!  They’re too afraid to charge a higher price or raise their prices for fear that it will deter customers from buying their product.

What is often the case, as Dunn mentions, is that most customers are curious about the high price point rather than being put off by it.  Many will actually wonder, “Why is this product higher than the others?  Is the service better?”

It does take people longer to make a decision to buy if a product is priced higher.  However, the  benefit to having a product that is priced higher than others, or raising the price of it is that you are signaling to potential customers that you have a quality product.  You’ve created a product that you are confident will deliver results.  If they are serious about getting results then they should try it out!

Pricing is never set in stone.  You will of course iterate on it based on the feedback you receive from customers.  But if you believe you can deliver a quality solution then set the price point high even for initial customers.

Did you enjoy this post? If so, and you want more strategies for pricing your product, then check out our Lean Product Development Course Learn more!


Justin Reyes is an web marketer noob, blogger, startup fanatic, coder (when need be) and obsessed with the Silicion Valley tech community.

 

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Stop Building

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A lot of founders come to me and say, ” I need to fundraise!”  When I stop and ask them why, they say, “Because I need to money to build more product!”  So then I proceed to ask them, “Will building more product definitely get you more paying customers?  And how many will it get you?”  Silence.

When to Build and When to Walk

If you cannot quantify the number of new customers you will close by creating a new product or feature, there is really no point to building it.  Too often people hear from potential customers that they don’t have XYZ feature.  They might hear this a couple times and think that they should go build the feature, but that’s exactly the wrong thing to do, because it just drives up costs.  Your cost of creating the feature and maintaining it goes up.

If you really think that customers will absolutely not purchase your product without a certain feature in it, then why not round them all up and get them to pre-pay to have it built?  Put a price on the product, and see how people react.

This is a tactic one of the startups I’m advising took recently.  A potential customer of the founder told her that they wanted XYZ feature.  Her startup team just didn’t have the bandwidth to make it happen, but it was a pretty prominent customer whom she knew had deep pockets.  She also knew that if she built XYZ feature that other customers she had talked to before would come back.  Instead of saying no to building the feature, she figured out the cost of building it, then told the customer how much they would need to pay to build the feature.  The customer happily obliged, and the feature then went into production.  There was of course some back and forth negotiation, but throughout the process it was evident that the customer really needed the feature, and was willing to pay for it.

Focus on creating value.

Why We Jump to Building

Its easy to want to build, because it gives you a sense of accomplishment.  You’ve created something that is tangible.  Whats harder to do is to convey the value of the product you’ve already built, and find new markets to sell to because it requires you to think creatively.  But often times this is absolutely necessary, especially if you are limited on funds.  If you’ve got a product that has been selling regularly, and you know you don’t have the means to make more product, focus on finding new markets and new marketing angles.

At some point you have to stop building, and a good time is when you know you have a customer base that is consistent.

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Book Review: BakedIn

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Marketing is essentially telling a story and conveying a message to customers and users about a product or a company.  But how do you tell a compelling enough story when there are 50,000+ products out there each competing for a slice of the market?  Perhaps it would be easier to get a slice of the pie if you’re marketing strategy was baked into your product.  The strategies for doing so are highlighted in my latest read: BakedIn. The authors discuss 28 rules that infuse every aspect of your product and business with a story.

While I’ve been called a marketing genius on stage by Aaron Forth, VP of Product at Mint.com, I hardly warrant such a title.  It takes a lot more than just a simple name to create a successful product and brand like Mint.

Here’s are a few highlights of what it does take:

Cultural Trends – understand where the consumer culture that your product is using is headed.

Design – think about ways to design each element and use them as touch points to interact with your customer and evoke an emotional response.

Find out what business you’re in – list all the service and the emotional benefits you create for customers.

Know the entire business category – use a competitors products to see what advantages and disadvantages it possesses.

Get your hive on & Knock down the walls – siloed organizations do not lead to innovation (another reason why great firms fail).  You need to foster a collaborative culture within your organization across departments, and make sure that information is flowing between the departments, instead of it being hogged or withheld by a few.  If need be jump across silos, but be aware that it might cost you your job.

Absolute – strive to be the superlative in a field (fastest, smallest, quickest)

Design to your weakness – confront the big hairy monster that is standing in the way of your organization’s success and find ways to design around it.

Good short read for anyone who wants to infuse life into a flailing product, create a new product, and most importantly tell a compelling and gripping story to keep customers engaged.

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