Product Collective - Take the dread out of product pricing
How to take the dread out of product pricing
Setting the price for your product is a delicate balancing act. Set it too low or too high and your bottom line takes a hit. The fear of not finding the right price may cause you to dread having to set a price for your product. Fear not, here are some techniques you can use to have a bit more confidence when searching for just the right price.
In product news, data security wins out over public safety, AI may not be your product team’s best developer, and TikTok’s metrics send a mixed message.
How Can You Test a Customer’s Willingness to Pay? Assessing a customer’s willingness to pay is a critical discovery activity that directly ties to your viability assumptions. But Teresa Torres suggests that asking customers about what they might do in the future leads to unreliable feedback. Instead, you should ask about past behavior, or better yet ask them to pay right now.
The art of product pricing: A guide for product managers. Navigating the intricacies of product pricing, especially for software and services, can be a challenging feat. Unlike traditional products with a tangible cost of goods sold, determining the right pricing strategy for a SaaS product involves a myriad of considerations. Seyifunmi Olafioye explores fundamental pricing concepts and strategies and highlights effective practices that provide you with the insight you need to navigate the complexities of pricing.
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The New York Product Conference returns to the Times Center in Manhattan on April 18th for a packed day of:
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This Week’s Video
Mastering SaaS Pricing: From MVP to IPO. Building great products is hard enough — but pricing them can be just as tricky. Pricing and packaging are one of the most powerful, yet overlooked, levers to drive growth in a SaaS business. In this talk, Kyle Poyar, Senior Director of Market Strategy at OpenView Partners explains how to approach pricing & packaging in a data-driven matter, describes the best monetization strategies for each stage of your company’s growth, and shares case studies on the dramatic impact of pricing & packaging from leading SaaS companies.
This video, and many more just like it, are available on our Member Hub. If you don’t have access to the Member Hub already, you can join the community today for free.
Unity changes pricing; backlash ensues
For tech products – pricing is far more than a mere number. It’s a pivotal element of your product strategy that can significantly impact your product's success and market positioning.
Take Unity's recent pricing model changes, for instance. The gaming industry giant shifted to a per-install charge, sparking considerable backlash from the developer community. There were even death threats to the company because of this pricing change. (Seriously, people – are we really going there?) This scenario underscores a critical lesson: pricing changes, particularly those perceived as abrupt or not in tune with user expectations, can have profound implications. They not only affect revenue streams but also, and perhaps more importantly, trust and loyalty among your user base. In this case, the anger that the changes seemed to cause were, in part, because indie game developer margins are already so thin. This change would seem to crunch the “little guys” even more.
Earlier this week, I took a deep dive into product pricing in this essay, and one of the common pitfalls I referenced was ignoring market dynamics. I’m sure that Unity put a lot of thought into making this giant change. But it’s worth spending as much time as possible with the different segments of customers that will be affected to address these issues well before… well… there are literally news articles about how disappointed and angry they are.
Unity's recent challenges with pricing changes provide a valuable lesson for all of us in product leadership. For us Product Managers and Leaders, this serves as a stark reminder of the importance of integrating pricing strategy into the product development and management process from the outset. It's not just about finding the right price point but also about ensuring that pricing changes are managed as part of the overall product experience.
The product pricing strategy guide: 5 Popular monetization models explained. At last, you can finally release your product for the world to try. But what should you charge for it? This is the million-dollar question you need to answer by choosing and exercising a product pricing strategy. Suren Karapetyan, MBA offers a selection of different pricing strategies, along with their most appropriate use cases. If you're stressed about deterring users or possibly leaving money on the table, check out this resource! (via The Product Manager )
How to Price a Product in 5 Steps. How to price a product is one of the most challenging and complex tasks a product manager faces. Of course, there are obvious concerns, such as pricing goods too high and turning off buyers. But then, psychological factors also come into play. For example, people place more value on a higher-priced product. The folks from ProductPlan explain how you should price your SaaS product and outline a process to help your team find the ideal prices for your products.
Resources and news curated by Kent J. McDonald.
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