Setting the right price for innovative products is one of the most difficult tasks for startups. Setting wrong prices can result in either losing customers or profits. Pricing strategy is based on if your business model is based on; 1. Cost Base approach 2. Value Base approach Cracking the perfect price for your innovative products require continuous testing and optimization. The lecture gives different pricing strategy types and pricing strategy examples to help students understand the concept easily. Video Lecture to the slides can be found at: https://youtu.be/ARIZ0r_t6CA

1. Pricing Strategy
For Startups

2. DISCUSSION
POINTS
QUICK OVERVIEW
Why Pricing Innovation is Hard
Why Pricing in itself is Hard
Pricing Strategies
Cracking the Perfect Price
Example of Revenue Models

3. Why Pricing Innovation is Hard?
No Historical
Data, or
existing Bench
Mark Pricing
Requires Users
to Change
Patterns
Avg User likes
routine and
walking on set
path
Finding Early
Adopters who
are price-
insensitive

4. Why Pricing in Itself is Hard?
Too Low/High Prices
Underestimate Costs
Don't Understand Your
Value
Focus on Wrong
Customers

5. Pricing Strategies
Cost Based V/S Value Based Pricing

6. Brand Cost Price Profit Margin
Apple iPhone 5 s $2 1 8 $8 4 9 7 4 %
Samsung Galaxy S3 $2 1 3 $5 4 9 6 1 %
Apple iPhone 5 C $1 8 3 $5 4 9 6 7 %

7. Consumer Surplus

8. Cracking
the Perfect
Price For
Your
Startup

9. Price Optimization
Price Conversion Rate Sales Volume Revenue
P1 20% 40 $200
P2 15% 25 $250
P3 10% 20 $300

10. Do Not Ignore P1 & P2 !!!
Offer Discounts, deals, etc. to get
those customers, as well

11. $1 B Formula
$Price X #Customers = $1 00M/Year
$1 00 X 1 M
$1 K X 1 00K.
$1 0K X 1 0K
$1 00K X 1 K

12. 4 Examples of Pricing Strategies
Market
Penetration
Psychological Razor n Blade Bundle Pricing

13. THANK YOU!