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Principles of Pricing

principlesofpricing.com

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Re: Principles of Pricing

#5

Post by petewailes »

Aulig wrote: post #3

If you're looking for another in-depth (139 pages), data-driven pricing guide, I can recommend ProfitWells Price Intelligently guide: https://www.priceintelligently.com/hubfs/Price-Intelligently...

I'd second this. It's a bit waffle-y, but the shout for starting with a Van Westendorp PSM is pretty solid. Would like to have seen a mention of Gabor-Granger as that then helps bring a secondary element of profit maximisation into the mix.

Van Westendorp is great for understanding what prices the market will accept, but not great for allowing you to model what will maximise your returns.

Overall though it's a good intro to the subject.

Re: Principles of Pricing

#6

Post by petewailes »

I'd say it's worth noting that this only applies to SAAS. There's a giant pile of things missing from this if you have inventory, manufacturing or anything else more complex than software and developers.

Pricing is an unbelievably complex subject which this doesn't get close to discussing properly.

Re: Principles of Pricing

#7

Post by m0llusk »

> ... business ... purpose is ... to survive, and ... to maximise profit ...

That is kind of like saying the purpose of human life is breathing. Yes, breathing is critical and fully integrated into existence, but there is so much more to living well. Similarly the purpose of business is to create value. Survival through flows of money comes as a result of that. Money dominated conversations can help, but often miss fundamental issues. For example, there is a big psychological difference between a software service with regular payments versus occasional software releases that can be bought and owned. With the right pricing the two are essentially the same, but customers tend to have very different feelings toward each model.

Re: Principles of Pricing

#8

Post by SMAAART »

m0llusk wrote: post #7

> ... business ... purpose is ... to survive, and ... to maximise profit ... That is kind of like saying the purpose of human life is breathing. Yes, breathing is critical and fully integrated into existence, but there is so much more to living well. Similarly the purpose of business is to create value. Survival through flows of money comes as a result of that. Money dominated conversations can help, but often miss f…

I see your point and I agree. Alas, while not perfect, money is the closest proxy to measure value, not so much from the seller's POV, but the buyer's; how much money-value are they willing to part in order to acquire the goods/services being sold.

Re: Principles of Pricing

#10

Post by Closi »

m0llusk wrote: post #7

> ... business ... purpose is ... to survive, and ... to maximise profit ... That is kind of like saying the purpose of human life is breathing. Yes, breathing is critical and fully integrated into existence, but there is so much more to living well. Similarly the purpose of business is to create value. Survival through flows of money comes as a result of that. Money dominated conversations can help, but often miss f…

The bit of the sentance you stripped out was the bit where they emphasised that they were describing a basic and simplified definition because there is actually an entire chapter on what you are talking about - i.e. consumer preferences and different considerations for different models (including "What does the customer perceive it as fair/value when considering SaaS vs perpetual licencing?").

Sometimes you start with overly simplified concepts to help people frame/grasp later ones, i.e. when teaching a child science it's better to teach them that there are 4 fundamental states of matter first, before they later learn that there are 29 known including the Bose–Einstein condensate, Fermionic condensate and Rydberg molecule.

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