How to decide how to price your product or service?
Chetan Natesh
10 replies
If the market leader is giving the product for free. For example - FB. If you wanted to make a paid social media platform, how to price it? Is it better to just wing it and see?
Replies
Kyle Henz@kyle_henz
Will your product be of that worth to compete with it?
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@kyle_henz The MVP is going to validate exactly this, but if validated, what then?
Social media is free because you are the product. It gives people with $$$ to reach others to sell their products. It's a free marketplace where people are given the opportunity to buy a spot to advertise what they want. You must build a community before you get to price anything in this context. At least that's what makes sense to me! FB was "free" for many years before it even started monetizing its platform (IIRC).
@chetan_natesh About the pricing, just go first with what I could call "MVB", that's the price that would require you and the product to be financed and allow you to keep developing it. Your price can evolve into different phases of the product, as long as there are new features being added. First, it would be the MVB (minimal viable business, then for the next pricing, you can double it, and so on for the next phases. Your business will dictate the price. Always run the numbers into your annual expenses for the next year. You may budget for new stuff and it should be added to your pricing. At least, that's how I would price my product! Hope it helps ;D
Test and adjust accordingly.
Understand common pricing strategies in your industry.
Conduct market research.
Experiment with pricing.
Focus on long-term business profit.
Thanks Kiar, from what I understand you mean to say pricing is not a one time decision but an ongoing process?
@undline_y +1 to all of this! We are just starting this process for our company, and my plan is to be deliberate with the initial pricing based on market research and competitive landscape, but don't wait forever to find the "perfect" price. Launch an initial price, experiment, analyze outcomes, update market research as landscape evolves, iterate - repeat! Just like with product.