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Pricing Thoughts
Seth Levine
@sether
These slides are available on
SlideShare
at bit.ly/sethonpricing
ADMIT IT …
ADMIT IT … YOU DON’T KNOW SHIT
ABOUT PRICING
SADLY, NEITHER DO I
The truth about pricing models
• There IS no truth
• For every “rule” there’s an example of
someone who did the opposite and was
successful
• You may think you are, but you’re not different
That said, here are some thoughts…
Beware too many pricing tiers
• Less is more
• 3 is ideal
• I can sometimes be convinced 4 is ok
• If you have more than that you’re making it
too complicated
Clear diff between pricing tiers
• Tiers generally aren’t about more they’re
about different/better
– Add discrete features with each tier (i.e., analytics,
or a workflow module)
• Don’t overestimate your customer’s ability to
understand your product features – MAKE
THEM OBVIOUS
• Use these higher tier features to promote
upsell in the product itself
If you do offer more with each level
• Make sure whatever feature you’re offering in
increments is extremely obvious (and it’s clear
to your users how much they’ll need)
• Consider an overlay model where tiers have
different features but allow one “by the drink”
feature to be purchased across tiers
Beware what you tariff
• This is a tricky one, but you want to be sure
that you’re not overly taxing the very feature
that drives value and engagement from your
users
• Pricing effects your customer’s behavior
• Make sure you understand your cost structure
The Freemium “myth”
• If your product doesn’t have a network effect
• If your product is relatively well known
• If you offer value right away to your users
Maybe you should charge for it (right away)
Charge more
• Don’t be afraid to charge a healthy price for
your product
• Consider if you have the “penny problem”
• You should lose customers because you’re
priced too high
• It’s easier to lower price than to raise it
How about your trial period?
• Rather than free, consider offering trials
• BUT limit the trial period
• Generally 14 days is plenty of time for people
to see if they like what you’re doing
• Manage the trials, don’t just wait and see (and
know what tips people from lookers to buyers)
A few more thoughts
• End in 9 or 7 (probably 9, although the
research isn’t 100% dispositive on this point)
• $1000 is better than $1,000.00
• Price for value (again – don’t under price)
• Does the 10x rule apply? At least consider this
• Value is absolute, not comparative
• Segment your customers
Salesforce
Sales Cloud
LeadPages
BasecampBasecamp
Survey Gizmo
Pantheon
Sendgrid
Follow-up Reading
These slides are available on
SlideShare
at bit.ly/sethonpricing
The end
seth@sethlevine.com
@sether

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Seth Levine Pricing Thoughts 2016

  • 2. These slides are available on SlideShare at bit.ly/sethonpricing
  • 4. ADMIT IT … YOU DON’T KNOW SHIT ABOUT PRICING
  • 6. The truth about pricing models • There IS no truth • For every “rule” there’s an example of someone who did the opposite and was successful • You may think you are, but you’re not different
  • 7. That said, here are some thoughts…
  • 8. Beware too many pricing tiers • Less is more • 3 is ideal • I can sometimes be convinced 4 is ok • If you have more than that you’re making it too complicated
  • 9. Clear diff between pricing tiers • Tiers generally aren’t about more they’re about different/better – Add discrete features with each tier (i.e., analytics, or a workflow module) • Don’t overestimate your customer’s ability to understand your product features – MAKE THEM OBVIOUS • Use these higher tier features to promote upsell in the product itself
  • 10. If you do offer more with each level • Make sure whatever feature you’re offering in increments is extremely obvious (and it’s clear to your users how much they’ll need) • Consider an overlay model where tiers have different features but allow one “by the drink” feature to be purchased across tiers
  • 11. Beware what you tariff • This is a tricky one, but you want to be sure that you’re not overly taxing the very feature that drives value and engagement from your users • Pricing effects your customer’s behavior • Make sure you understand your cost structure
  • 12. The Freemium “myth” • If your product doesn’t have a network effect • If your product is relatively well known • If you offer value right away to your users Maybe you should charge for it (right away)
  • 13. Charge more • Don’t be afraid to charge a healthy price for your product • Consider if you have the “penny problem” • You should lose customers because you’re priced too high • It’s easier to lower price than to raise it
  • 14. How about your trial period? • Rather than free, consider offering trials • BUT limit the trial period • Generally 14 days is plenty of time for people to see if they like what you’re doing • Manage the trials, don’t just wait and see (and know what tips people from lookers to buyers)
  • 15. A few more thoughts • End in 9 or 7 (probably 9, although the research isn’t 100% dispositive on this point) • $1000 is better than $1,000.00 • Price for value (again – don’t under price) • Does the 10x rule apply? At least consider this • Value is absolute, not comparative • Segment your customers
  • 23. These slides are available on SlideShare at bit.ly/sethonpricing