Most businesses struggle with their product pricing strategies. Are you charging too much or too little? What’s the right price to charge so you can grow your bottom line?
The harsh reality is, there is no one magical pricing strategy. However, you can generate more revenue by constantly optimizing your pricing.
Most of us want to sell at maximum profitability, which means: sell as many (units, copies) as possible at as a high a price as possible. Here are 16 articles that will help you with your pricing.
In no particular order:
You launched a new software product. Congratulations! One of the biggest questions you’re going to be asking now is, “How much should I charge for my software?” Heres is Joel Spolsky’s excellent take.
When you’re setting a price, you’re sending a signal. If your competitor’s software ranges in price from about $100 to about $500, and you decide, heck, my product is about in the middle of the road, so I’ll sell it for $300, well, what message do you think you’re sending to your customers? You’re telling them that you think your software is “eh.”
In casino land, the term “rake” refers to the commission that the house earns for operating a poker game.
If you run a platform and you charge others for using it, you need to read this one.
One of the most challenging parts of being a freelancer is charging what you’re worth. While many default to charging by the hour, it’s usually a bad idea.
Here’s how you should price instead.
Despite their success, it’s still not clear which strategy worked best. Optimal pricing depends entirely on your specific goals and type of business.
Read their posts in this order (as they were published):
Some really insightful lessons on what resulted in Bidsketch’s biggest increase in revenue ever.
Pricing is always hard. But knowing which segments you’re pricing a product for, and how much value they get out of your product, gives you a great starting point.”Ruben | Extended Logic
When it comes to perfecting your pricing, you’re going to have to experiment. Shopify breaks down 10 ways to help you find the best pricing strategy for you.
The art of pricing requires you to also calculate how much human behavior impacts the way we perceive price.
Running pricing experiments is a great start, but these product pricing primers can safe you a ton of time.
One of my most read and shared articles ever. Here’s a list of some lesser known pricing experiments that can help you optimize your pricing strategy.
Despite the click bait headline, this article makes a very important point. Ignoring it is costly.
This excellent article examines the most common mistakes startups make with pricing:
- Believing everyone should be happy to pay for your product.
- Believing there is some mythical “perfect” price which extracts maximum revenue from every single customer.
- Believing product pricing can never be changed once chosen.
- Delaying charging indefinitely as a result of 1, 2 and 3.
There are three different strategies you can employ with pricing: cost plus pricing, competitive based pricing and value based pricing. Knowing the pros and cons of each can save you from costly mistakes.
While it’s rare to be in an industry where your customers truly don’t care about the price you charge, this article is incredibly insightful using gas as an example.
The good-better-best approach to pricing is a great framework for getting your prices right. Here’s what you need to know.
G-B-B’s benefits come from three approaches: offensive plays aimed at generating new growth and revenue, defensive plays meant to counter or forestall moves by competitors, and behavioral plays that draw on principles of consumer psychology, whatever the competitive landscape.
There’s a lot of great insights on pricing shared in the articles above. Here are a few common themes shared in each.
- There is no perfect pricing. You won’t get your pricing right the first time, so stop stressing about it. Pricing is a process and requires continuous optimization like everything else.
- Higher prices lead to bigger profits. This is confirmed by a study of the Global 1200 that found if companies raised prices by just 1%, their average operating profits would increase by 11%
- Make sure your mobile SaaS pricing pages don’t suck.
- Human beings are irrational and don’t know the fair value of anything. Price anchoring and other “tricks” work very well.