[HN Gopher] Pricing Your Product
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Pricing Your Product
Author : wanderer42
Score : 149 points
Date : 2020-05-02 17:19 UTC (5 hours ago)
(HTM) web link (www.sequoiacap.com)
(TXT) w3m dump (www.sequoiacap.com)
| mcsoft wrote:
| It's insightful to learn that in their guide on pricing Sequoia
| cites Phil Libin, then-CEO of Sequoia-backed Evernote, who was
| later kicked out exactly because the company struggled to find
| the right pricing model.
| vmception wrote:
| Reminds me of seeing job posting's from Softbank for a
| "Valuation's Director" immediately after finmeme accounts
| trashed the WeWork S-1
| throwaway7281 wrote:
| Value-based pricing is the worst societal invention. Imagine a
| medicine can be made from simple ingredients, but you discovered
| a recipe by accident. It's very valuable since it might save
| lives, so the value is high, the cost is low and you can reap the
| benefit on the mere basis that you discovered something by
| accident. You also need to make sure that no one "gets it", so do
| not educate people, just milk them - and in the worst case,
| mislead them, work against any threat "knowledge" would pose.
|
| Mundus vult decipi, ergo decipiatur.
|
| Imagine a world, where progress and invention would be something
| shared and done not out of greed but out of ability and
| ultimately generosity that would add to the grace of our race.
|
| Instead we celebrate greed, as if we were a bunch of apes.
|
| My fear is that human society needs to reach new lows before we
| actually have the chance to see our own potential (and then it
| might be too late, anyway).
| cortesoft wrote:
| There are consequences to an economy where the margin is fixed
| across all industry... just look at the free internet... since
| the you basically get paid for eyeballs, with no premium for
| providing more value (a visitor gives you the same per user
| price for ads no matter the quality of the content), there is a
| race for cheap content that appeals to the most number of
| people... you don't get investment in companies that provide
| high value, because you don't get more return for high value.
| exolymph wrote:
| Supply and demand dynamics =/= invention, but rather
| description.
| throwaway7281 wrote:
| I understand the price signal and the process of price
| detection through the myriads of needs and abilities. That's
| all fine and actually great, as a relatively robust
| distributed system.
|
| What I do not get is why keeping people in the dark is a
| cornerstone to many endeavours - value-based pricing just
| being an example of that.
|
| Edit: maybe I spend too much time in the open source world
| and mistake it for some model setup for other parts of
| society that do not work like that at all.
| fsloth wrote:
| Value based pricing is not about obfuscating your product.
|
| If you manage to get extra revenues because the market values
| what you have you can invest the surplus to more better
| products.
|
| The point is, you shouldn't dictate what users value your
| product, let the users dictate it.
|
| "Imagine a world, where progress and invention would be
| something shared and done not out of greed but out of ability
| and ultimately generosity that would add to the grace of our
| race."
|
| The first gotcha there is figuring out what exactly _is_ the
| grace of the race. Most entities that successfully employ these
| sort of mission statements are dictatorships and the like and I
| 'm sure you didn't mean that.
|
| I think the first hurdle to get over is that world is complex
| and us people are not smart enough to handle all of that.
| lpolovets wrote:
| One of the biggest lessons I've learned as a VC in the past few
| years is that pricing really has to be aligned with and
| proportional to the value your product provides. If someone gets
| $100 of value per seat and you charge $15/seat, that's great. If
| you charge $15/seat for a product that creates value per
| gigabyte, people start gaming the system. E.g. they'll buy one
| seat for their company and ask that person to be the proxy user
| for your product. Or if you charge $10/GB and people get $20/GB
| of value of the first few gigabytes and then $5/GB of value after
| that, you're going to run into problems.
|
| So figure out how users perceive and quantify your value to
| themselves, and then try to come up with a simple pricing scheme
| that captures 10-25% of that value. That way every time someone
| pays you $1, they get $4-$10 of value, and that's a no brainer
| purchase.
|
| Getting pricing right has a huge ROI across the board. Good
| pricing improves margins, reduces sales friction, and creates
| happier customers.
|
| The best book that I've read on pricing is Monetizing Innovation:
| https://www.amazon.com/Monetizing-Innovation-Companies-Desig...
| jkuria wrote:
| ICYMI (Was on the front page most of the day 2 weeks ago):
|
| Once you figure out general price, here's a good guide to Pricing
| Plans
|
| https://capitalandgrowth.org/answers/Article/3169972/The-Def...
| GCA10 wrote:
| The article hits its stride at paragraph 14, where they talk
| about the importance of "value-based pricing" rather than "cost-
| based pricing."
|
| My wake-up moment came in 2013 or so, when I was pricing the
| digital version of a long-ago print book I'd written. ("Merchants
| of Debt"). I knew that it kept finding a niche audience among
| investment bankers and people who want to be investment bankers.
|
| E-book prices were dropping, and I wanted to get full value from
| my best customers without seeming out of step with the market.
| After all, most finance types can afford to be price-insensitive,
| but they still want to feel like they're getting good value. The
| solution was to create an unabridged edition for $9.99, and a
| condensed edition (about 40% of the content) for $3.99. Truth is,
| the condensed edition gets very few orders. But the fact that it
| exists makes it much easier for serious buyers to pay up for the
| full edition.
|
| Knowing the customer's frame of mind -- which usually is quite
| nuanced -- is the key. Especially when, as the Sequoia folks
| point out, the marginal cost of another digital copy is always
| very close to zero.
| duxup wrote:
| I fall for this time and again.
|
| I want to buy a board game. I've already decided I'm buying it
| but hey there is a deluxe version for a price I wasn't planning
| to pay... so yeah I buy it.
| ludocode wrote:
| Interesting example. With board games I avoid the deluxe
| versions because they're often incompatible with expansions.
| Power Grid and Settlers of Catan come to mind.
| eruci wrote:
| Pricing is HARD. I launched a SaaS in 2016 with a 100eur per
| month recurring plan. only 5 signups in two years. Then around
| 2018 someone wrote me "that's incredibly cheap. why?" So, I
| doubled it to 200eur per month. Today there are 60 recurring
| plans at 200 per month, and only 3 @100(grandfathered plans from
| the early days.)
|
| Clients tend to think that if something seems too cheap,
| something is wrong with it.
| 101008 wrote:
| My problem with this advice of testing your pricing strategy is
| how to communicate this to actual customers. Maybe this isn't a
| thing in Europe or USA; but in third-world countries a change in
| the price it is important and something your customers want to
| know.
|
| If I set my prices higher, I can't change it for my current
| customers. They will get mad. So I ahve to create a full logic on
| the backend for customers created after X date, etc. It is a
| mess.
|
| If I set my prices lower (i.e., display lower prices on landing
| page, etc), my current customers will get mad at me if I don't
| change them for them too ("Why I am paying more than the price
| you are saying this costs?"), etc.
|
| So for me, this strategy of A/B testing prices, find the right
| price, etc, has been always too complicated to implement. When I
| tried, I end up adding more problems to me to deal with, and at
| the end I couldn't analyze the trends I wanted it.
| kbos87 wrote:
| Maintaining that book of past prices, who is on them, the
| discounts they negotiated, the feature formulation they had -
| its a nightmarish web of complexity even at large SaaS vendors.
| cameronbrown wrote:
| I really can't imagine why. This seems like one of those self
| contained problems where some PricingService and a DB returns
| a number and deals with all the complexity internally. That
| seems like the logical place where you'd do A/B testing of
| prices and the like.
| pavlov wrote:
| One trick you can use is to figure out a set of product
| parameters that you can tweak into new combinations to create
| lots of pricing plans. They may be effectively identical to
| previous ones as far as your cost and engineering are
| concerned, but different enough that customers don't feel
| someone is getting a different price for the same thing.
|
| E.g. your previous "Medium Starter" plan included 10 foobags
| and up to 1.5 zoffobytes of data for a price of $19. Your new
| "Basic Plus" plan includes 15 foobags and 1.2 zoffobytes for
| $25.
| andi999 wrote:
| I didnt buy a robot vacuum because of this. There was a crazy
| amount of different ones from the same company with different
| pricings. Maybe it is better now. But usually I want a
| product which fulfills my supposed needs for a reasonable
| price. Too many different products (especially from the same
| vendor) give me the certainty no matter which one I choose
| one or the other criterium will fail.
| dang wrote:
| This is a stub root comment to collect comments about website
| formatting, which have been transferred hither.
| eliseumds wrote:
| Oh wow, that contrast is terrible (Chrome Mobile, Android).
| dredmorbius wrote:
| https://outline.com/CGsLnv
|
| (But yes)
| paullth wrote:
| Why not just have white text on a white background? No idea
| what's in the article
| throwawaysea wrote:
| On Desktop I see black text on white background, although the
| videos don't seem to load.
| vulcan01 wrote:
| Reading mode to the rescue!
| robertbalent wrote:
| Only if you disable JavaScript it's white text on white
| background.
|
| It's current trend to write CSS styles in JavaScript.
| tasuki wrote:
| It's like #222 on #FFF ... not bad contrast?
| lonelappde wrote:
| Extra thin font violates accessibility standards.
| paullth wrote:
| Not sure why, but on my phone it's barely readable.
| xellisx wrote:
| The font could be made bold..
| pests wrote:
| Night mode or dark theme related maybe?
|
| Some sites don't set a body background color thinking it
| will always be white.
|
| Might be related.
| duxup wrote:
| Firefox reader view saves me on a regular basis.
| helaoban wrote:
| That website is a crime against humanity.
| dang wrote:
| Maybe so, but please don't post unsubstantive comments to
| this one.
| paulcole wrote:
| I found this to be quite readable. Nicely designed site!
| gramakri wrote:
| On mobile, the text is barely readable
| paulpauper wrote:
| How ironic given that it's biggest winners in its portfolio are
| companies that never sold anything (at least not initially),
| Linkedin and Instagram for example.
| duxup wrote:
| The article seems to indicate that Linked In has made a lot of
| money selling services.
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(page generated 2020-05-02 23:00 UTC)