Post on 12-May-2015
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233 Needham Street • Suite 300 • Newton, MA 02464 • (508) 647-0330
Pricing Isn’t Rocket Science ---
It Just Takes Some Work
and time
and teamwork
and judgment
and experience
and luck
The Ethics of Garage-Sale Arbitrage
Is it ethical to buy something at a yard sale or flea market at the seller’s asking price, if you know the value of the item to be significantly higher than what is being asked because the seller didn’t do their research?
Should you say anything to the seller?
The Ethicist, New York Times Magazine
Is it ethical to buy software from a software sales repat the seller’s asking price, if you know the value of the item to be significantly higher than what is being asked because the seller didn’t do their research?
Should you say anything to the seller now?
The Ethics of Buying Software Licenses
Right Price
Wrong Price
Pricing That Works
Pricing That Works
Offering
Market Stage
Value Delivered
Your Economics
TargetCustomer
Pricing Works Better When You …
• Look Beyond Price Level
• Focus on Right Customer
• Manage Perception of Value
• Have Good Processes
Look Beyond Price Level
Level
Customer
Perception
Process
Focus on Right Customer
Level
Customer
Perception
Process
Manage Perception of Value
Revenue
TimingImplementation Risk
Other Considerations
Economic Drivers
Level
Customer
Perception
Process
Cost
Manage Perception of Risk
Would you flip a coin?
+ € 1,000
+ € 500
€ 0€ 0
- € 1,000
- € 500
€ 1,000€ 0
ExpectedValue = € 500
ExpectedValue = € 500
Pain (Loss) > Pleasure (Gain)
Manage Perception of Value
• Loss aversion
• Anchor high
• Compromise
• Herd instinct
Manage Perception of Value
“Technology means nothing unless it enables a differentiated customer experience.
Nobody goes into a restaurant because it has a mobile app.”
CEO Panera Bread
Technology Value
Have Good Processes
Level
Customer
Perception
Process
Have Good Processes
MetricMetric
Bundles
Amount
Terms
Deliverables
Incentives
MetricMetric
Bundles
Amount
Terms
Deliverables
Incentives
License Model
Price Setting
Transaction Structure
Metric
Pack
ages
Amount
Terms
Incentives
Deliverables
Standard or Tailored Offerings
To-Do List
• Look Beyond Price Level
• Focus on Right Customer
• Manage Perception of Value
• Have Good Processes
To Help With Your To-Do List…
http://downloads.businessofsoftware.org/dontjustrollthedice.pdf
Thanks!
Jim Geismanjimg@softwarepricing.com
+508 - 647 - 0330
233 Needham Street • Suite 300 • Newton, MA 02464 • (508) 647-0330