Getting Your Pricing Right (BCTIA)


20-Oct-2010 - BCTIA hosted this well-attended and useful discussion on how to figure out your pricing. It's a really tough thing to get right, as it's more of an art -- finding a perfect resonance -- not too high, too low, too complex, too simple... The cool thing about the panel was that not only did it include two excellent pricing professionals, Steve Forth and Chris Hopf, but it also included Reg Nordman, who brought a clear sales perspective - an essential, but easily overlooked -- or is avoided? ;) -- view to getting pricing right. The presentation was for product management and marketing managers and focused primarily on B2B.


Chris quoted McKinsey & Co. with the suggestion that a 1% increase in pricing can translate into an 11% increase in profitability - so make sure you think before mucking about, as the opposite is likely too true!

The two things that stuck in my head from Steven's words were: 1) pricing is about value - pricing issues are really perceived value issues; 2) build your company around maximizing value to your customers. From their perspective, value from your products is what positively impacts their business... how do you help them to make more money?

Reg gave some valuable tips on how to spot pricing issues (that they are worse than you think...) Amongst them was the underlining of the fact that sales people are concerned with their compensation and their job risk... . It is marketing's job to give them the tools, tactics and training to sell value. He went on to discuss what each department can do to make things better.

The post-presentation discussion included some back and forth on "freemium" tactics. At first it seemed obvious that this is not a good approach, but considering Google Search and others, showed that two-sided markets, for example, can thrive on the basis on having a free component. Food for thought was that LinkedIn has yet to figure out an offer for most of its users - for example, very few of the millions of users have found a compelling reason (i.e. price > value) to upgrade from the free basic account.

Links mentioned in the presentation: (Chris Hopf's company) (Steven Forth's company) (Reg Nordman's site)

Thanks BCTIA & panel, and it was great to see friends there too.

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