Product Pricing

Getting the most jam for your products

My background Over 15 years of Managing Products

• Product Management/Marketing

– ICL Enterprise Middleware, Peerlogic, IONA Technologies PLC, Am-Beo, Prime Carrier, Axiologix

• Product Launches, re-launches, mid-life ‘refreshes’, legacy and end-of-life

• However all generated product and service revenue & taken market share

Product Pricing

• Minefield of options – PLC, Annual Right-to-Use, Subscription models

– SDK/RTU

– Upfront vs. Usage based approaches

– Free version vs. Premium version

– Free time based Trial

• The only metric is what a customer will pay – And only if it solves a business problem relating to

Time, Risk or Money

Pricing Metrics

• Per User

• Per Transaction

• Per Event

• Per Deployment

• Which is best depends very much on Market size, value proposition, competitors

Keeping Price as part of the Mix

• Price is a key element of the Marketing Mix – Not just the basic 4 P’s, but the 9 P’s for Service delivery

• Product • Price • Promotion • Place • People • Process • Physical Evidence • Packaging • Payment

– If you adjust one element of the Marketing Mix, you need to adjust the rest of the Mix

Price Books

• Useful to set the Standard Price for your Product and portfolio of Products

• However not to be treated as a Price Bible

– As prices may have to be flexible to win business

– Commission is paid on achieved price

– Channel margin is also applied to achieved price

• Try and make Discounting an exception rather than the norm

Up-sell

• Design Price Tiers into your pricing – Increased usage = more € – More users = more € – Ensure that if a Customer Company is acquired then

price can be revisited for use by the acquirer – Additional functionality = more €

• Modularize your products, into value-adding elements built on a core platform

• Sell the platform, then sell the individual functional elements

• Standard Editions, Enterprise Editions, Premium Editions • Different versions for different OS platforms

Major/Minor Releases

• Charge for any new release

– Modular additions/plug-ins

• Bug fix versions must be delivered under current Support Contracts

• If you are delivering free versions, giving support for free, delivering free updates, unless there is a huge up-sell or exit strategy or significant strategic reason

‘Fremium’ model

• Limited functionality at ‘No Charge’ or time-based trial – Can be difficult to make work, as you have

devalued your product from the outset • Market now expects it for €0 & wants it supported

• Hard to change perception

– Could deliver 90% of value proposition with no hope of up-sell post Trial or paid-for version

– Works in large-volume markets • E.g. App Stores, ‘selling’ to millions with low cost of sale

Product Pricing

• Position Pricing carefully in the 4Ps or 9Ps mix

• Determine price based on the Market’s ‘perception of value’

• Build-in lots of pivot points & Tiers

• Use Licensing mechanisms to enforce compliance – no pay, it no work

• Consider ‘Fremium’ / Time-based Trials carefully as not to deliver Value Proposition early