SCIENCE OF PRICING CustomerDevLabs.com
Science of Pricing by Justin Wilcox
Oct 21, 2014
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SCIENCE OF PRICING
CustomerDevLabs.com
Nathan Founder
Helix Labs
Mark Founder
MovingWorlds.org
Justin Founder
Nimbus Health
Nathan Founder
Helix Labs
Mark Justin
Customer Development Labs
Founders
Accelerators
Corporations
Customer Development Labs
Practice Lean Startup
Helps {
Science of Pricing
That’s Us.
Get to Know You
What is Success Today?
http://bit.ly/leanpricing
What does Demand Look Like?
Groups of 3
3 Products…
Lowest Price = Suspicious
Gas Generics Haircut
“You get what you pay for”
Price
Units
“Get What you Pay for” Curve
3 Products…
Lowest Price = Good Deal
Gas Flights Landscaping
Price
Units
“Good Deal” Demand Curve
Did you ever disagree?
different people = different curves
Price
Units
“Combo” Curve
Professor Min Ding
Penn. State
2010: Journal of Retailing
Price as an Indicator of Quality
Price Implies Quality
Price
Units
“Low Interest” in Quality Curve
Price
Units
“High Interest” in Quality Curve
Price
Units
“Actual” Demand Curve
“Actual” Demand Curve
Quality Hump
Real Demand isn’t Blue
It’s Pink
Optimal Pricing = More Revenue
Optimal Pricing = More Customers
Is this true for Startups?
Garick Hismatullin
Founder
Medical Consultations
via Phone
Founders Institute
$15
$25 8.5%
$49 8%
$99 10.5%
Startups have quality humps.
Yes.
BONUS: Find your Hump
Find More Customers
NEXT UP
How to find your Hump
Reflection
1 Takeaway
BREAK
@CustomerDevLabs
#LeanStartup
How to find your hump?
Price Testing
A/B Testing your Price
PRICE TESTING:
1. Build a landing page
2. A/B test price
3. Accept real credit cards
Questions
Everyone gets the lowest price
SECRET 1:
Where is our Hump?
Pre-Orders
SECRET 2:
What should we price test?
Who wants to find their hump?
Pick your team
45 Minutes to Launch
Something like…
Go.
45 MIN
40 MIN
35 MIN
30 MIN
25 MIN
20 MIN
15 MIN
10 MIN
5 MIN
2 MIN
1 MIN
DONE
NEXT UP: Driving Traffic
Reflection
1 Takeaway
BREAK
@CustomerDevLabs
#LeanStartup
Driving Traffic
3 Ways to Drive Traffic
Free Traffic Paid Learn &
Optimize
FREE!
Give Your Friends a Script
• Ask for advice
• Be Grateful
Give Your Friends a Script
Hey Friend of Friend, My friend is launching a new startup trying to solve ________. I’d love it if you can take a minute, take a look at its new site, and support it if it speaks to you. Of course, if you have any thoughts or connections, I’d be happy to connect you with the founder:______. Thanks a ton! -Friend
Posting to Groups
• Be respectful
• Be humble
Posting to Groups
Not sure if this is appropriate for this group or not, but I’m passionate about solving the _________ (problem) and hoping for some advice.
We’re launching ________ to help solve the ______, and I’d love your thoughts.
If you can help, please take a look at the page, and shoot me any thoughts you have:
Responding to Quora/Forums
• Add value
• Give full disclosure
Responding to Quora/Forums
Full disclosure, I run a startup which is trying to solve this problem. We just launched ___________ to make it easier to _________. It should help you solve this problem. And if you want to message me, I’d be happy to talk about your situation in greater detail and share the insights I’ve learn along the way.
PAID The real kind…
Problem-focused Google Adwords
Emotional-focused Facebook
Professional/Skill-focused LinkedIN
Industry/Trend-focused Twitter
Paid Sources
You have the tools.
Bringing it all together.
A
B
Bounce pre-orders
1.4% $5 x = $.07/visitor
1.7% $10 x = $.17/visitor
before built product
0.9% $20 x = $.18/visitor
Our Goals
Why should you price test?
GOAL 1
Find your Hump
Find More Customers
How to Price Test
GOAL 2
PRICE TESTING:
1. A/B test price
2. Lowest price to all
3. Real credit cards
Learn by Doing
GOAL 3
You’ve done it.
Reflection
3 Takeaways
1 Next Step
NEXT UP: Q&A
Feedback
QUESTIONS
@CustomerDevLabs
#LeanStartup
Nathan Founder
Helix Labs
Mark Justin
CustomerDevLabs.com
SCIENCE OF PRICING
CustomerDevLabs.com
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