Consider this situation:
The product is an 'information product' (delivered through text, audio, video in a secure online area), which can help in business and technology management (like reducing bad decisions, making better business plans, developing winning proposals, etc). The target clients are business professionals – senior managers, executives, and business owners. Assume that the product has value, i.e., it delivers what it says. (confirmed based on initial market testing)
The product is innovative (could be launched patent pending, if required). There will be two levels of offering:
Product A= Information/Analysis only, and clients decide how to use it.
Product B= A + active suggestion on how to use it.
{the plan is to offer both on per month subscription basis, with a 30 day money back guarantee}
What would your approach be to arrive at the pricing? How much would you be willing to pay for A, and for B?
(continue to assume it will benefit your business decisions and actions as mentioned above)
It's okay if you give a range. Your inputs will help a lot. Thanks.
The product is an 'information product' (delivered through text, audio, video in a secure online area), which can help in business and technology management (like reducing bad decisions, making better business plans, developing winning proposals, etc). The target clients are business professionals – senior managers, executives, and business owners. Assume that the product has value, i.e., it delivers what it says. (confirmed based on initial market testing)
The product is innovative (could be launched patent pending, if required). There will be two levels of offering:
Product A= Information/Analysis only, and clients decide how to use it.
Product B= A + active suggestion on how to use it.
{the plan is to offer both on per month subscription basis, with a 30 day money back guarantee}
What would your approach be to arrive at the pricing? How much would you be willing to pay for A, and for B?
(continue to assume it will benefit your business decisions and actions as mentioned above)
It's okay if you give a range. Your inputs will help a lot. Thanks.
1 comment:
Conceptually, the approach that I might take for both products is
If Y=f(x), where Y is pricing, I need to know the xs which will drive the pricing and their relation to the Y. The Xs that I can immediately think of are Value to the customer, competition in the industry and their pricing, cost of production for the service, Organisation strategy etc. Once the Xs are brain stormed, then we can form the equation Y=f(x), by looking at the impact of x to Y.
Among the above "value" will be the most important and if this value is based on a great competitive advantage, the impact of other factors on pricing becomes insignificant, and we can charge the customer more. Thus quantifying this variable will be most important. How we do it? Simplistically from end to end perspective, this information product is giving a value, which is consumed by an organisation to generate revenues/cut cost/ move on startegy. How much is this information worth(value) can be described by the customer best. Or we make assumptions about the value that it creates to the customer based on the tit bit information that we may have and how much revenue increase/cost decrease/strategic fit, it will mean to the customer.
Typically information products are not perceived to create huge value to the customer, as the information can not be used readily. It has to be processed, analysed and then used. So there is quite a bit of execution and value adding component, which has to be done by the customer making the success not very imminent(Except racing or insider tips on shares, which can be used readily to make money).
Hope that helps, though it may be statistical
Cheers
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