4. Many Pricing Options
Subscription Ads
Per usage B2B2C (free for C, paid by
Upfront fee B)
Pricing plan Bidding
Commission Freemium
Success fee Free trial
Tiered pricing Money back guarantee
Dynamic pricing (think:
airline) …
Pay what you want
Virtual economies And combinations of the
Up-sell services above
Interesting resource (collection of pricing pages of web apps):
http://leanstartup.pbworks.com/w/page/15765232/Pricing%20pages
6. Costs are often Underestimated
Think about
• Marketing costs (Google, Facebook ads)
• Affiliate cost
• Support costs
• Infrastructure
• Admin, accountancy, legal
• Taxes
• …
Fixed vs variable
Is there “economies of scale” effect?
7. Viable Business Case?
Not only about the cost
# potential customers / projects /
licenses?
Calculate potential revenue & profit
• At what price do you have a viable business
• With halved assumptions?
Create a simple financial plan
http://www.slideshare.net/FinanceCoach24/120417-
workshopfinancialplan
9. What Type of Value are you
Delivering?
Help customers make money?
Help them save money?
Reduce their risk?
Help them save time?
Provide them non-monetary benefit?
10. Ask your customers
Learn what your market really values
E.g. “Give me 3 compelling reasons
why my product is a good fit for you”
And get you marketing copy for free
11. Look at the Competitors
Check the price of top 3 competitors
But also
• How much competition?
• How do you differentiate?
• How much transparency?
Internet makes it very easy for prospective
customers to compare you to others that they
can buy from
Less transparency => less price sensitivity
12. WHAT HAPPENS WHEN YOU SET A
LOW PRICE?
Thanks Linda M. Lopeke
http://www.smartstartcoach.com/
13. YOU DILUTE YOUR BRAND
You just told your prospect: “I'm not your best option (and I
know it)”
Pricing is an essential part of your product and marketing.
Sometimes raising the price can result in more sales
14. YOU TURN OFF HIGH QUALITY CLIENTS
And get stuck with “clients from hell”
15. YOU RISK LOSING MONEY
Always more costs than you think
And if you do well, you can lose serious money
16. IT TAKES LONG TIME TO MAKE MONEY
Low margins
Same time & effort to sell high and low
17. HOW TO DIFFUSE PRICE OBJECTIONS
Thanks to Neil Patel
http://www.quicksprout.com/2012/10/01/how-to-handle-
pricing-objections/
18. Explain the value and Free trial or money
list what they get back guarantee
• show $ made or saved • Crazy Egg free trial had
Detailed case studies 59% higher conversion
rate than 30 day money
• exactly what you back guarantee
provided & the results
• testimonials with photo,
Payment plans
company name, their • 4 payments of $67 ($268)
name and title converted 52% better
than $197
Show how you are
better than competition Offer bonuses
Explain – people want (early stage) Explain
to pay what’s fair. that you had to quit
Don’t want to be work / work part time
screwed over
20. But don’t make it too complex!
Hmmm… maybe I should go for mayo
21. PRICE TESTING
Thanks to Twilio!
http://www.slideshare.net/twilio/twilio-monetizing-saas-jeff-
lawson-cloudstock-december-2010
22.
23.
24.
25.
26.
27. Steps
1. Figure out value generated
2. Determine your costs
3. Determine your competitor’s prices
4. Calculate minimum and maximum
• Min: cost + 1
• Max: 25% of money made; 20% of money saved;
• Competitor +/- 20%
5. Consider other pricing strategies
• But keep it simple!
6. Test with potential customers
• Before launch (e.g. free private beta)
• Start high, increments 10%
7. Segment
