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