[HN Gopher] Don't just roll the dice - Software pricing guide (2...
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Don't just roll the dice - Software pricing guide (2012) [pdf]
Author : MatthewBF
Score : 190 points
Date : 2020-01-12 18:13 UTC (4 hours ago)
(HTM) web link (neildavidson.com)
(TXT) w3m dump (neildavidson.com)
| damir wrote:
| Wow, thanks for this PDF. Can't believe this is freely
| available... IMO they could easily charge for this and I'd gladly
| pay...
| Arkanosis wrote:
| I'd be glad to pay now that I've enjoyed reading it... but I'd
| almost certainly not have read it if I had had to pay first.
|
| I like the approach taken (among others) by Matthew Butterick
| for Practical Typography [1]: I've enjoyed reading his book the
| same way and gladly paid for it /after/, as he asks, even
| though I would not have bought it at first.
|
| [1] https://practicaltypography.com/
| ya3ad wrote:
| Thanks :-)
| MatthewBF wrote:
| A helpful guide by Neil Davidson on how to develop a revenue
| model for your software business.
| gnicholas wrote:
| > _I can tell you that nothing we have ever done at Fog Creek has
| increased our revenue more than releasing a new version with more
| features. Nothing. The flow to our bottom line from new versions
| with new features is absolutely undeniable. It 's like gravity.
| When we tried Google ads, when we implemented various affiliate
| schemes, or when an article about FogBugz appears in the press,
| we could barely see the effect on the bottom line_
|
| For early-stage startups that are not well-know, press can
| definitely have a bigger impact than more features. For me,
| coverage in The Atlantic led to an interview on NPR, which led to
| tons new customers and a long-term benefit of being able to say
| we'd been covered by these two outlets. It helped with customer
| acquisition and award competitions.
| dang wrote:
| I remember this as having had prominent discussions on HN in the
| past, but I searched and can't find them. Anyone?
| kick wrote:
| Looked for a few minutes. My best guess is that if there was
| one, it was probably submit under a different link with an
| editorialized title. On Red Gate's site alone, there's at least
| a few copies, along with the one on Davidson's site and the
| other copy that used to be on his site.
| mojuba wrote:
| This article I think comes very close but never answers the
| central question here: how to find the price that generates
| maximum revenue.
|
| I have a hypothesis that price tolerance follows Pareto
| distribution, i.e. the function of the number of people willing
| to pay any given price for the same product must have the same
| shape as the overall wealth distribution among your customers.
| Therefore it should be theoretically possible to find your peak
| price that yields maximum revenue in the following three steps:
| (1) take measurements at several different price points (A/B
| test) (2) find the Pareto parameters for your customers (3) solve
| the differential and find the peak.
|
| The same in a bit more detail:
|
| https://medium.com/@hovm/finding-the-max-revenue-price-mark-...
| cperciva wrote:
| I think it depends on your context. If the alternative to
| buying your product is not buying your product, people may be
| willing to pay an amount proportional to their wealth; but if
| the alternative is a lower-priced competitor, the price they're
| willing to pay will be anchored.
|
| Jeff Bezos is far wealthier than I am, but I don't think he
| would pay a million dollars for a hamburger.
| mojuba wrote:
| True but I think competition is already factored into the
| hypothesis as the lowest price nobody is willing to pay,
| which in case of a hamburger and given the competition could
| be only say $25. So you will be looking for a peak in the
| range say $10-25.
| franciscop wrote:
| I've heard about American people who take a plane only for
| eating something specific on Europe. The direct price might
| not be so much, but that's still on the thousands.
| AmericanChopper wrote:
| A/B testing prices is an existing practice (though one that has
| the potential to upset customers, should they find out). You
| can also test different pricing hypothesis in different
| markets. But I think this is most common when there's little
| competition in a market/segment. In a competitive market, you
| already have a lot of information to base pricing decisions on
| (what do my competitors charge, what are their margins, what
| pricing changes have they made in the past...)
| Darkphibre wrote:
| Reminds me of the articles that came out in 2016, where we --
| _finally_ saw the first comprehensive Supply /Demand curve in
| the wild: http://freakonomics.com/podcast/uber-economists-
| dream/
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