Pricing is a scary, complex subject largely ignored by most, and often left as a last-minute decision. Considering the massive impact monetization can have on business revenues, one cannot afford to stay in the dark about pricing. In this crash course, I share the basics, tips, and resources that I've picked up from partnerships with pricing advisors and through navigating SaaS pricing projects.

1. A Crash Course in
Quantifying Value
Pricing in the Real World
ERIN (hinson) MCNAMARA

2. slideshare
@eeh40
erinmcnamara.me
New phone. Who dis?

3. Pricing is, like, really important.

4. … like, more than 4x as
important as new customer
acquisition that everyone is
so obsessed with.
Pricing is, like, really important.

5. have never tested, piloted or
conducted market research
for their pricing40%
More than
competitors
guessing
cost-plus
30%
21%
7%
...alternatively,
they use...

6. Fake it ‘til you make it.
how to math

7. Probably time to wash those jeans.
Indifferent Price Point
The mid point at which people either think
it’s expensive or inexpensive
Price Sensitivity Analysis (van Westendorp)
The amount someone will pay for something
Relative Preference (MaxDiff)
Forcing someone to make a decision
between two or more options [most/least]
Elasticity Curve
The number of sales you can expect to
lose/gain if you change your price
Value Metric
The thing people will pay for (because they
value it)
Willingness to Pay
The price someone is willing… to… pay
Likelihood to Buy
On a scale of 1-7, how likely someone is to
buy the thing
Optimal Price Band
The range that optimizes both revenue and
sales volume

8. If you don’t spend time understanding your customers,
they will never understand your product.

9. I have no idea what I’m doing.
Who is the right customer?
And what do they care about?
● Cost to acquire (CAC)
● Lifetime value (LTV)
● Most/Least valued features
● Willingness to pay
Becky
The Businesswoman

10. Which of these is LEAST and MOST important to you?
LEAST MOST
Sour Cream
✘ Lettuce
Guacamole ✔
Salsa

11. Yes, I know guacamole is extra.
Guacamole
Feature 2
Feature 3
Feature 4
Feature 5
Feature 6
Feature 7
Feature 8
0 0.1 0.2 0.3 0.4-.1-.2-.3-.4

12. More cheddar for the guacamole.
At what price...
… is it too expensive that you’d never purchase?
… does it start to become expensive, but you’d consider purchasing?
… is it a really good deal?
… is it too cheap that you question the quality?

13. Meet me at tha crossroads.
the most number
of people who
would buy your
product
indifference
price point

14. Let’s get Becky some damn guacamole.
Most valued:
Lettuce
Least valued:
Sour Cream
Most valued:
Guacamole
Least valued:
Lettuce
IPP OPB LTB
Becky $5.00 $3.89 — $5.41 5.6
Brock $2.00 $1.95 — $2.39 3.2

15. I got my pricing degree at PHU.
Use bundling to maximize revenue based
on what people value and what price
they’ll pay.
Class of 2008
$9 for guacamole, $1.50 for
lettuce
$8 for guacamole, $5 for
lettuce
$4.50 for guacamole, $8.50
for lettuce
$2.50 for guacamole, $9 for
lettuce

16. Changing your pricing is a Hasselhoff.

17. Grandpas & other thoughts...
Grandfathering? Yes, (if you have to) but on a limited basis.
Discounting? Sure, but be smart about it.
Free trials? No. (Maybe, but it depends on your business model and market.)
Testing? Yes, don’t be ‘that’ guy.
Communicating? Be authentic and straightforward. Focus on the value.

18. Don’t talk to strangers.
Find your guacamole.
Change your oil.
slideshare | @eeh40 | erinmcnamara.me

19. Resources
● http://users.metu.edu.tr/mugan/Hinterhuber%202004%20value%20based%20pricing.pdf
● http://priceintelligently.com/blog
● http://offers.openviewpartners.com/seed-stage-saas-pricing-guide
● http://www.inc.com/ilan-mochari/pricing-bundling-willingness-to-pay-pizza-breadsticks.html
● http://www.meetspaceapp.com/2016/09/15/meetspace-pricing.html
● http://blog.profitwell.com/how-to-calculate-ltv-for-saas-the-right-way
● https://blog.kissmetrics.com/customer-acquisition-cost/
● http://www.appcues.com/blog/how-our-pricing-increase-emails-grew-sales-263-percent/