Pricing

PRICING 7 forces to factor into your thinking

There are 30-40 pricing experts on the planet. I’m not one of them. My name is Chris Lema and I’ve been building hosted web-based software (SaaS) since 1994. When it comes to pricing, I’ve just made lots of mistakes.

It’s not just about Price. It’s about environmental scanning, business modeling & sustainability.

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It’s not about Demand Curves. You need too many prices. You need to offer them too long. You need no one else to know.

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Mass is not a business model. Price products so that every product or service sale makes sense.

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The 7 Pricing Forces

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First, understand the Players in the Market Don’t say you have no competition. You just sound naïve or silly.

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Second, understand Your Prospects Knowing their pain and the benefits of solving those pains helps you know how to set your price.

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Third, understand Your Positioning You only have three choices – cheap, competitive, or classy.

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Fourth, understand Your Profit Margin Know what your “floor” is, so you can decide if you need to change other parts of your model.

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Fifth, understand Your Product Strategy Will you sell add-ons? Will your product have a network effect?

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Sixth, understand Pricing Psychology Learn what says “premium” and what says “discount” and leverage it.

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Seventh, evaluate any Problems with Pricing Sometimes the price isn’t what’s wrong and lowering prices won’t help you.

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Special Cases with Pricing •  Calculating Hourly Rates •  Project-based Pricing •  Scope Creep •  Premium Segments

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Questions?