Australian-based, internationally experienced, advisor on pricing, monetization and business models...as well as a entrepreneur
Internationally recognised and experienced, my passion for optimal pricing strategies ensures that, on average, I achieve at least a 20.9% revenue uplift for companies I work with.
My career has been a journey through the most commonly used pricing methodologies: the secretive pricing in the oil industry, cost-plus pricing in catering & consumer packaged goods, revenue / yield management in aviation, travel & tourism, and dynamic pricing in internet cafes on the High Streets of the EU and USA.
Today, I primarily develop value-based pricing and monetisation strategies for companies that recognise that its not what I know about pricing in their industry that counts: its what I know about pricing in so may other industries that helps make my work with them more profitable.
One simple way you could do this is to offer a price-match guarantee: tell you prospective customers you will be match or beat (even by 5% or 10%) your competitors price, on production of a quote from your competitor. That way, you outsource competitive pricing intelligence to your customers. Nothing wrong with that!
As Seth Godin once said "If all your customers care about is price, its probably because you haven't given them anything else to care about!"
Get those numbers on bad handling, shipping delays, lost packages and differentiate yourself from your competitors!
Repackage what it is you do, in the way that Orica stopped selling explosives and started selling a rock removal service.
I don't know how many "shipping lanes" you have: if you have many, surely the level of competition differs. Make your money where there is less competition and be competitive where there is more competition. Look at your T&C's as well - can you make them more attractive to help differentiate yourself, or better align them with your clients business model?
Hope that helps - happy to chat and discuss further
I think podcasts are a bit like the early paywalls. No one has really worked out the best way to monetize them yet. My recommendation would be to experiment. There is no such thing as a pricing lab. Try something, if it doesn't work, try something else. The Economist recently looked at the topic here: http://www.economist.com/news/business-and-finance/21688740-handful-successful-presenters-are-dispelling-myths-about-medium-podcasts-are-gaining
You're really going to have to provide a lot more information to get answers to your challenge, or talk to one of us.
If you are in a highly competitive industry where everyone know everyone else's pricing, you need to ask questions about discount management / containment, as list prices are pretty much irrelevant in those sorts of scenarios. Other questions that would help address your challenge include: Are we talking prices points of ~$2 or $20k? Are you selling B2B, B2C or both? Do you have a sales force? Where do you want to position yourself in the market? Would you like to shake up the industry with an alternative pricing model that can't be compared to the competition? If you're selling online, is your website optimised for behavioural economics monetization? The list goes on and on...
I'd get on the blower to one of us if I was you!!!
I had the same need 6 months ago. I tried 7 legal firms that called themselves "disruptive start-ups" but they could not provide a) timely services b) a modest amount of customer service c) a fixed price or d) any combination of a) b) or c). In the end I went with an established law firm that did provide a), b) and c) but it came at a cost. You get what you pay for.
The research has found that customers commonly associate prices ending in zeros as conveying a quality, premium message.
Prices ending in 9 are commonly associated with discounted, on sale, cheap.
Most customers know that $29 = $30.
When the time comes to increase a $29 price point, there is typically a drop in sales (albeit temporary, unless you've hit the customers price ceiling). You are less likely to experience that when increasing a $30 price point
Happy to chat further on this if you're interested
As someone who has worked in pricing for almost 30 years, I know that one of the biggest myths of pricing is that you should only offer one pricing model. Offer two - both subscription & transactional. Customers will self-select &/or the market will segment, and you will quickly find out what is their preferred pricing model.
As an aside, another pricing myth is that you can low-ball your pricing and raise prices later. Its successful in ~10% of attempts.
By default, the choice of pricing models also states the obvious. Its not about what you want. Its about what the customer wants.
And yes, you should have three choices. One choice gives you a 50:50 chance of closing the sale. Two choices forces the customer to make a price-based decision. Three choices, and the customer says "which one do I buy?" not "do I buy from this outfit?" and secondly they are forced to make a value-based decision.
Also think about creating a decoy product, and on the pricing page on your website, lay the packages out dearest on the left, cheapest on the right.
Happy to chat further about any of the above...or more!
You need to consider the first two rules of pricing here. Rule #1 - all value is subjective. That means while you think your service is fantastic, nothing like it, etc., ultimately it is the customer that determines value. They are the single point of failure for your product. The second rule of pricing is all value is contextual. That means you create and control the environment or context in which you product commands the price that it does. If you want to create a "fair price" environment, you need to communicate that to customers as part of your pricing communications strategy. This is easier to do when using cost-plus pricing than it is with value-based pricing. Have a look at EverLane's About page & infographic on their t-shirt pricing for some inspiration, and feel free to arrange a call if you want to chat further - Jon
Off all the comments below, I like Ryan's the best. I assume the reference to "personalized" is a reference to the platform and possibly the content. Personalised pricing (aka marketing nirvana) is nearly with us (the airlines are closest) but there is still a way to come.
I like Ryan's comments below because there is no rules that says you should only have one pricing model. Let customers self-select / self-segment. Those who want program fee will buy it and those that want subscription will buy it. One model may service as a decoy to another and v.v..
With the subscription model, create three versions (think good / better / best) and price on a log pricing curve (not linear), unless you're making one of those three options a decoy.
The advantages of three options: customers say which one do I buy? (not do I buy?) and you force them to make a value-based, rather than a price-based, decision.
Happy to chat further!
Probably not enough information to answer this question here, but...
1. the new pricing models sounds like the monthly charge will be variable and unknown. Some buyers won't like this (eg if you're B2B, they won't be able to budget for your costs)
2. Have customers asked for this? Therein, may lie the answer to your conversion rate question
3. There is no rule that says you have to have one pricing model. Launch a secondary model and let the customer choose. You could even consider framing one as a decoy?
Have to chat further if you're interested
I agree that this isn't really a pricing problem (more value proposition, sales, etc), but pricing may help fix the challenge. There's not enough information provided to give definite answers, but I would suggest a) offering a choice of pricing models (outright purchase & rental immediately spring to mind) b) offering choices within those choices, where applicable (e.g. 12 / 24 / 36 math rentals) and c) creating a decoy product (like the $A24k Apple watch). If someone buys it, great, if not, it makes every other product look great value).
Happy to chat further on this
Supportive and considered is Jon’s approach to Pricing. He is able to translate his deeply technical knowledge base into understandable concepts and great results. I would only hesitate in recommending Jon on the basis that you might get him to work for you when I want him.
If you want assistance in ANY form of pricing situation then Jon is your man. He knows the pricing world from top to bottom and is very good at pulling at the strings of your product to understand where the value lies for your customer. Every ask yourself "I don't know how to price this?" then Jon is who you should call.
Jon is one of the most rounded pricing professionals I have had the good fortune to meet. We have known each other for 8 years, during that time he has always offered constructive and practical directions for our client work together.
Jon is flexible and extremely easy to work with. He has high standards, is unfailingly courteous and objective and invariably adds value for his clients.
Jon presented an informative webinar to members of the ACCA SME & SMP group, about pricing. The presentation was well received by attendees and Jon was able to answer all of our questions. We all learnt something.
As the host of "Making Busiess and Sales Work" podcast I get experts to discuss issues that impact and educate small business operators. When it came to the topic of pricing I approaced Jon and was lucky to get him as an expert on the topic of pricing. I can not recommend Jon highly enough.
Jon has spoken at the Churchill Club on a variety of occasions over the last couple of years. I have found him to have a fine mind, and one of the few people in Australia that has any real grasp of business model innovation. I can always rely on Jon for a global perspective on pricing and revenue models, balanced with some quality execution level advice. On top of that I enjoy his company and the wide ranging conversations we have.
Jon's technical capability is a clear asset in rolling out a successful pricing strategy. However, it is clear that his understanding of the behavioural changes required to execute that strategy are of most value.
During a high profile business intelligence project at REA, Jon provided critical advice and input to the project team that proved vital in the projects success.
Jon provided specialist pricing consultancy as we launched a new business. His strategic viewpoint, combined with years of real experience and pragmatism, enabled him to help us define a market-entry strategy combining pricing with other elements of the marketing mix that had immediate results. Jon challenged our thinking and brought insights from other market sectors that had strong applicability in our market. I have recommended Jon to other business contacts and would be happy to do so again.
I found Jon's perspective on pricing and consumer behaviours refreshingly different. Jon and his company look and study the impact of pricing especially in the internet age where consumers are more knowledgeable and companies have new tools at their disposal, such as dynamic pricing. Jon himself is extremely adept at working with these new media - him and I forged a virtual relationship over the internet that led to collaborative research project. When I eventually met Jon I found him to be as friendly and professional as he was in the virtual world. A great guy to work with who will bring competitive insights and advantages to your business.