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Making people pay
Start time: 0:35
Giving something away for free is fine as a step one as long as it leads to a step two where you charge for your product. Pick a price that seems fair to you and that you’d be willing to pay. If you’re not willing to pay for your own product, don’t expect anyone else to either. Also, your price tiers need to make sense relative to each other. The price of Haystack changed at the last minute. Changing prices post-launch can cause real headaches.
Start time: 13:38
Instead of stealing part of an existing market, create a new one. Invent your own category by fusing things together and/or looking at what people are really trying to achieve and solving that.
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Jamie, Baymard Instituteon 01 Dec 09
Even though it has been the standard for ages and it feels like you guys have been saying it even longer, “Have a price” is quite solid advice. Go figure ;)
John Topleyon 01 Dec 09
I’m loving these podcasts, keep it up please!
Edon 01 Dec 09
Interesting! A few people I know would never use free web apps for business applications and are mostly put off by there being no cost!
Michaelon 01 Dec 09
Quite often I am surprised at what something costs because it is so cheap. It’s a little scary to think they could easily sell me the same product for less money because I can’t judge value without a reference point. Your advice is for businesses and not consumers, though.
David Hauseron 01 Dec 09
Thank you for reminding people to have customers actually pay for the product/service they consume. VCs and media focus way too much on the ones that have no model and will figure it out later.
Chris Hopfon 01 Dec 09
Really appreciate your team advocating the critical role pricing plays in the speed to and sustainability of success (however success is defined).
Value Messaging is key and the following statement has helped me help others understand the critical link between value and pricing:
It’s not the price they don’t like, but what they understand they are (or are not) getting for that price.
Take care and thanks again,
Chris Hopf – http://www.pricingwire.com – Twitter: @pricing
steve sammartinoon 02 Dec 09
Totally agree with this entry. There is no such thing as free, there is only delayed revenue, or related revenue generation.
In terms of pricing, I also price what I would pay, but often make the leap easier for my customers but giving an analogy they can relate to “the cost of a latte” – It’s one pizza a month.
So far it’s proven to be effective. Steve.
Arton 02 Dec 09
Interesting podcast, thanks.
Do you guys explicitly take into account any behavioural quirks/irrationalities of the customer?
There are few as described by Dan Ariely.
Greg DeVoreon 03 Dec 09
One thing to add about pricing. Not only does it help you sustain your business but having a price helps you find out who your customers are instead of just your users. I think you guys found that out with Backpack.
I posted a little about that here: Charging For Your Product Helps You Focus On Customers Instead of Users
And Clayton Christensen’s books should be required reading for any new business, start up or not. Find the holes in the market and life can be a lot better.
This discussion is closed.