Step 16 Set your pricing framework (Be flexible with pricing for (early…
Set your pricing framework
Costs not a factor in pricing - its the value you bring
Generally abt 20% of value you bring - u can monetize (QVP useful here) - though differs by competition and industry
Factors to consider
Business model - Ones like subscription give lesser risks to customers, therefore can price higher
If costs come up - be clear, based on value
Don't give out cost numbers to anyone unecessary! Specially sales!
Use DMU and Process to Acquire paying customer to
understand how budget works
Understand prices of customer's alternates
from their perspective
, how much willing to pay for each, specially considering status quo
Diff customer types willing to pay diff prices depending on how early they buy etc
Tech enthusiasts (Unis, tech labs etc)
Early majority - pragmatists - will help u make a truly scalable company
Later majority - conservatives
Laggards / skeptics
Be flexible with pricing for
But don't dec recurring costs for them
Expect from them feedback, case studies, on-site seminars etc
Have early customers sign agreements of confidentiality for price if needed.
Good idea to discount hardware, than software - since customers see value.
Easier to drop price than to raise it, best to price high then offer discounts initially.