Price metrics are powerful because product owners can pick from many metrics available for a specific type of offering. They can even structure their pricing using multiple metrics at a time. The most commonly found pricing metrics are
User-based: By the number of concurrent users, teams etc.
Activity-based: Number of activities or conversion paths completed, the types of features and attributes included in the plan, etc.
Business scale: Volumes of ou...
Here' at Pricing Innovations, we’ve set out to reimagine the way we innovate, develop and monetize products that meet their revenue and profit goals. That’s why we created the Pricing Canvas ™. The Pricing Canvas ™ consists of ten sections each representing a structural component of your business, product, and market. Each section helps you to design your pricing and monetization plans using the principles of strategic, competitive, and value-base...
When product teams evaluate their product roadmap on the basis of the economic value that the new feature and functionality will add, they accomplish two things. First, they utilize a quantifiable framework for their decision-making on the product development tradeoffs. This is very important because, in most organizations, the different stakeholders may have different ideas about what matters most or which feature will be of most value. Determining w...
The core principles of pricing can definitely help quantify the benefits of performance, productivity gains, cost or revenue drivers, and the value of new capability building. The real challenge comes into play when you strive to quantify the value of the factors such as your know-how, networks, brand, and market position. To address the latter, a good place to start is to determine the set of all the relevant reference points. You can then add - or s...
Arriving at the ideal price of a product or service requires a complex, multi-layered process that, to be effective, needs to maximize a company’s profitability, while allowing the product to be competitive in the marketplace. Experts, like those at Pricing Innovations, understand how to create the modeling and pull in the innumerable factors that help point to the most effective pricing structure.
When it comes to pricing, there are five key areas on which your product, marketing, and sales teams must align. These five areas are:
- Industry drivers
- Market drivers
- Segment drivers
- Product drivers
- Buyer/user behaviors
Companies choose price-cutting for any and all of the cases above but you cannot sustain or grow your business if you cannot maintain your profits. If you are choosing to go to market with a low-price or the best value position, then you should consider the following factors to optimize your margins.
Subscription businesses are in a better position to offer price discrimination to capture the differing needs and use cases of different customers, through multi-tiered pricing structures. A multi-tiered pricing structure allows businesses to configure their offering and align each tier with how different customers need, acquire and benefit from the offering differently. Therefore, not only the buyers can easily self-identify themselves and their need...
Reference value is about uncovering how much value buyers trade-off in exchange for your offering. Questions to derive the reference value could be formulated as follows:
“What would you trade me to solve for [the pain point in the way your solution solves it] right now?”
“On a scale of 1-10 what’s the importance of [solving for the pain point in the way your solution solves it]?”
“Which of the [features & attributes below] provide the most and the l...
IoT enabled technologies help firms align their product and service offerings by how their customers benefit from them. Different from the pay-as-you-go model, contextual pricing structures can result in better outcomes for adoption and profitability as they are tightly coupled with the customers’ outcomes and experiences. By using sensor and device data, firms can more accurately identify trends and patterns and offer context specific products and se...
Most companies treat pricing as a static piece of the puzzle ; once they determine their pricing and discounting structures, they assume they are set to cruise. In fact, nothing about your buyers, their needs, and your markets are static, why should your pricing be? It’s critical to treat pricing as dynamic as your markets' and users’ changing needs and align your pricing with their benefits accordingly.
Here are a few good signals that could wa...
If your net churn is above 2% per month, it means that you are losing more than 20% of your revenue annually – which consequently means that it’s time for a reality check. Customer churn may occur due to many different reasons, here we look at a few of those.
Differentiation is the “result of efforts to make a product or brand stand out as a provider of unique value to customers in comparison with its competitors .” If buyers judge the fair value of an offer in relative terms, then differentiating between offers becomes highly essential for influencing buyers’ perception of value.
1. Never Increase the Price for the Exact Same Offering
2. Hold on to Your High-end Customers
3. Charge Premium for Your Differentiation
4. Align Your Offer & Cost Structures with Your Customer Behavior
A key difference in dynamic pricing in the fitness industry from hotels and airlines is not only the much shorter booking window but also the time of consumption. In most hospitality and airline pricing software, the booking windows may range up to a year. In that regard, dynamic pricing in fitness industry could be closer to Uber’s surge pricing than hotel pricing. In Uber’s case, the booking of the service is near real time and the consumption of it...