Pricing is All About Value "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs November 11 2013 True Pricing, Value, Mind the Product Mind the Product Ltd 247 Product Management 0.988

Pricing is All About Value

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Pricing vs ValuePricing strategy is all about value. ‘Must-have’ capabilities are more expensive than ‘nice to have’.  So what’s the value to the client?

A simple way to look at pricing is to use a three-by-three matrix (like a game of tic-tac-toe or noughts and crosses). The vertical axis is the cost of doing it myself, while the horizontal is the number of vendors that offer it. Mark each with low-medium-high. The closer you get to the upper left, the more you can (and should) charge. That is, if it would take a lot for me to learn and there are few vendors who offer it, you can charge me a lot. If it’s fairly easy to learn and I have lots of choices, you won’t be able to charge very much.

tictactoe_pricing

For example, I’d put scrum method training somewhere in the middle, but more towards the lower-right. I can read books, I can attend training from many vendors and I have access to thousands of certified or self-proclaimed scrum coaches who can come to work with my team.

One way to manipulate this a little is to offer a unique capability that is unavailable elsewhere. A metaphor, a framework or an approach, for example, which is unique to your offering.

Finally, the challenge isn’t whether you can charge $5 or $50. The challenge is whether you can charge anything more than $0. With so much free content available, you have to offer something that people are willing to pay for.