Ask HN: How do you determine your price point?

https://news.ycombinator.com/item?id=677383

by quizbiz • 17 years ago

8 11 17 years ago

news.ycombinator.com

Trying to find a good price point for a license and for products. I'm not sure how to go about this. How do I charge one group x amount and another 2x an see which is more profitable?

aditya• 17 years ago

1. Survey your audience, ask specific questions like, would you pay a) $10-20 b) $30-$40 c) 1 million billion of this product

2. Check your competition to see what they're charging (counterpoint: http://en.wikipedia.org/wiki/Blue_Ocean_Strategy)

3. Pick a number (ref: http://network.businessofsoftware.org/video/dharmesh-shah-on... - worth watching in its entirety)

4. Play with specials - this week, we're offering a 30% discount to all new users (better than decreasing the price outright and incurring the wrath of existing users)

5. Model the numbers, at all times, how many licenses do you need at x price point to break even, etc.

stevenjames• 17 years ago

In terms of the product(s), what would you pay for it?

mediaman2• 17 years ago

That's not always the best metric, particularly when your product is being sold to an entity which is dissimilar to you (see: rich people, medium to large companies). In those cases, they are often willing to pay much, much more than you would.

Many people make the mistake of underpricing because of this.

patio11• 17 years ago

Relatedly, you not selling to HN posters, people on Slashdot, starving college students, or people who are morally opposed to spending money for software.

I don't mean to step on any toes, but I've heard "$20 is sort of pricey for a business -- why not make it $10?" enough to be skeptical of the advice on pricing from other people, unless they are saying Charge More.

nkohari• 17 years ago

IANAL, but you're in dangerous legal territory if you charge two groups of people different amounts for the same product. Either make it a different license offering, or make sure you're not discriminating against either group. :)

You really can't figure out a price point in a scientific way (sample and control)... you just have to adjust it organically and see.

ryanwaggoner• 17 years ago

I love how you state that you're not a lawyer then present definitive legal advice.

How is charging different amounts to different people "dangerous legal territory"? Companies do this all the time...think about all the transactions where the price is haggled back and forth, or companies offering a special discount to startups or nonprofits, or offering specials on certain days of the week, etc.

Unless you're segmenting your groups by some protected status, like gender or religion, I don't see how it's a legal matter at all. But mostly I'd like to hear why you know that it is.

dctoedt• 17 years ago

I think he's referring to the Robinson-Patman Act - http://en.wikipedia.org/wiki/Robinson-Patman_Act.

gojomo• 17 years ago

Flinch pricing:

http://venturehacks.com/articles/pricing

mattmaroon• 17 years ago

a/b test it if you have decent traffic. You have to make sure you get a statistically significant sample.

alavrik• 17 years ago

One of the best introductory articles on pricing I've read: http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...

Ask HN: How do you determine your price point?

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