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Pricing Your Product

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Re: Pricing Your Product

#41

Post by ryeights »

lucb1e wrote: post #40

> Natera recently brought to market a non-invasive pre-natal test that can detect Down syndrome and other conditions in a mother’s blood. Previously, testing for these conditions required a risky procedure that extracted tissue from the fetus. Other non-invasive tests aren’t as comprehensive. > Because Natera's test is better than its competitors' products, the company charges more. > “Premium pricing communicates a…

That stuck out to me as well, but it makes sense as an incentive for companies to create better products. Why pour money into R&D to develop new products if you're restricted to charging existing prices? Might as well just develop the existing product and save on the R&D costs.

Re: Pricing Your Product

#42

Post by freepor »

ryeights wrote: post #41
lucb1e wrote: post #40

> Natera recently brought to market a non-invasive pre-natal test that can detect Down syndrome and other conditions in a mother’s blood. Previously, testing for these conditions required a risky procedure that extracted tissue from the fetus. Other non-invasive tests aren’t as comprehensive. > Because Natera's test is better than its competitors' products, the company charges more. > “Premium pricing communicates a…

That stuck out to me as well, but it makes sense as an incentive for companies to create better products. Why pour money into R&D to develop new products if you're restricted to charging existing prices? Might as well just develop the existing product and save on the R&D costs.

Bounties are a good way to solve this. Invent a new therapy? The government buys your patent for a sum proportional to the value created (not to the dollars invested) and releases it to the public domain.

Re: Pricing Your Product

#43

Post by lotsofpulp »

lucb1e wrote: post #40

> Natera recently brought to market a non-invasive pre-natal test that can detect Down syndrome and other conditions in a mother’s blood. Previously, testing for these conditions required a risky procedure that extracted tissue from the fetus. Other non-invasive tests aren’t as comprehensive. > Because Natera's test is better than its competitors' products, the company charges more. > “Premium pricing communicates a…

>I understand that one needs to recoup R&D costs a few times over for it to be worth the risk, but that's simply cost price (risk * R&D cost / unit count * unit cost) and not a "premium product".

How are you going to attract top minds to do the R&D without paying them a premium? And investors need a premium to incentivize investing R&D, especially in the low probability of success field of biotech.

I don't agree with the way their CEO characterized it. He probably should have just said the pricing is commensurate with the costs involved in developing it or something, which include the opportunity cost of not using the funds to buy tech stocks.

Re: Pricing Your Product

#44

Post by lotsofpulp »

throwaway7281 wrote: post #24

Value-based pricing is the worst societal invention. Imagine a medicine can be made from simple ingredients, but you discovered a recipe by accident. It's very valuable since it might save lives, so the value is high, the cost is low and you can reap the benefit on the mere basis that you discovered something by accident. You also need to make sure that no one "gets it", so do not educate people, just milk them - and…

>Imagine a medicine can be made from simple ingredients, but you discovered a recipe by accident. It's very valuable since it might save lives, so the value is high, the cost is low and you can reap the benefit on the mere basis that you discovered something by accident. You also need to make sure that no one "gets it", so do not educate people, just milk them - and in the worst case, mislead them, work against any threat "knowledge" would pose.

Except that's not the world we live in. Effective medicines take billions of dollars, years of time from very smart people who have the option of choosing other careers, and still have an extremely high chance of failure. Imagining a world where all of that happens via charity is pointless.

Re: Pricing Your Product

#45

Post by twelve40 »

duxup wrote: post #26
paulpauper wrote: post #22

How ironic given that it's biggest winners in its portfolio are companies that never sold anything (at least not initially), Linkedin and Instagram for example.

The article seems to indicate that Linked In has made a lot of money selling services.

$250mil/year is 1/100th of what they eventually got acquired for. Linkedin was probably eventually making more than that, too (need to look) but I'd be surprised if revenue was the main reason for LI's success, probably more of a nice to have...

Re: Pricing Your Product

#46

Post by tyre »

lpolovets wrote: post #38

One of the biggest lessons I've learned as a VC in the past few years is that pricing really has to be aligned with and proportional to the value your product provides. If someone gets $100 of value per seat and you charge $15/seat, that's great. If you charge $15/seat for a product that creates value per gigabyte, people start gaming the system. E.g. they'll buy one seat for their company and ask that person to be t…

A related thing is knowing when pricing is no longer the issue.

If the pricing correlates enough with value and you can't close deals, I've seen too many companies think pricing will solve that.

Re: Pricing Your Product

#47

Post by maxwell »

lucb1e wrote: post #40

> Natera recently brought to market a non-invasive pre-natal test that can detect Down syndrome and other conditions in a mother’s blood. Previously, testing for these conditions required a risky procedure that extracted tissue from the fetus. Other non-invasive tests aren’t as comprehensive. > Because Natera's test is better than its competitors' products, the company charges more. > “Premium pricing communicates a…

> Natera

https://www.bbb.org/us/ca/san-carlos/profile/laboratory-rese...

https://community.whattoexpect.com/forums/december-2018-babi...

https://www.fastcompany.com/3059072/why-patients-are-getting...

https://www.reddit.com/r/BabyBumps/comments/aa0jqk/watch_out...

https://www.reuters.com/article/health-natera/natera-settles...

Re: Pricing Your Product

#48

Post by pragmatic »

cameronbrown wrote: post #37
kbos87 wrote: post #36

Earlier quoted context omitted.

Maintaining that book of past prices, who is on them, the discounts they negotiated, the feature formulation they had - its a nightmarish web of complexity even at large SaaS vendors.

I really can't imagine why. This seems like one of those self contained problems where some PricingService and a DB returns a number and deals with all the complexity internally. That seems like the logical place where you'd do A/B testing of prices and the like.

Maybe, but who's going to build that system when 110% of engineering is building customer features.

Much more likely that a ) engineering doesn't want to touch it ( for obvious reasons so b) sales/sales support maintains this in Excel or worse...

Re: Pricing Your Product

#49

Post by cercatrova »

dang wrote: post #21

This is a stub root comment to collect comments about website formatting, which have been transferred hither.

Could this be done for every thread? The comments that are only about the metadata rather than the content of the articles posted can be quite tiring to sift through.

Re: Pricing Your Product

#50

Post by ultrasounder »

lpolovets wrote: post #38

One of the biggest lessons I've learned as a VC in the past few years is that pricing really has to be aligned with and proportional to the value your product provides. If someone gets $100 of value per seat and you charge $15/seat, that's great. If you charge $15/seat for a product that creates value per gigabyte, people start gaming the system. E.g. they'll buy one seat for their company and ask that person to be t…

Also worth noting that Leo Polovets also is one of the early engineers at LinkedIn and is still very much hands-on. https://www.google.com/amp/s/www.forbes.com/sites/quora/2013...
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