You should treat a package or bundle as a new product launch — apply the same logic/criteria you would to it. In the eyes of your customer, a package/bundle is, in effect, is a new product for them.

The question of what packages to include tends to be a good problem! Your product team is busy developing new innovations across each sprint, your R&D is producing exciting new products. You find yourself sitting on a large product catalog!

Realizing how much stuff you’re now able to sell, you hope to accomplish several things:

  • Simplify your offering to prospects — having a large catalog or list of offerings to customers tends to complicate the sales motion and make it more difficult for reps. …

This is often referred to as a price metric or value metric. It refers to the unit in which you’re charging your customers.

You want to think about the primary benefit or value that your customers are deriving for your product.

Your customers should pay for your stuff and feel, “I’m paying ONLY for what I’m using — what you’re charging seems fair”.

Take a company like Netflix, which charges on the fixed per user per month metric.

If you think about it, they could have decided to charge their users any number of alternate ways:

  • They could have charged on the number of minutes a user watched. …

More generally put, this is the question of whether you should use psychological based pricing tactics.

The answer is yes — but you should not substitute those tactics for sound pricing research. You’ll make way more money generating compelling offers than you will relying on short term hacks.

It’s a well established fact in behavioral economics that people make dumb purchase decisions. We are all inundated with marketing messages and offers each day, and have adapted by using rules of thumb, heuristics, rough approximations to quickly evaluate what to focus on.

These shortcuts lead people to systemically estimate value poorly or inaccurately, and make irrational decisions. There are countless well documented examples of these types of decisions within academia. …

The best way of thinking about how to set your own prices is to think about how your customers determine their willingness to pay, and reverse engineer the process.

People purchase goods and services to satisfy needs or desires they have. When consumers evaluate whether a specific product is a fair price, they ask (implicitly) two questions:

  1. What are the prices of similar products I’m aware of?
  2. How much more or less valuable is this product to those alternatives?

For your business then, think then about how your customers view your offerings:

  1. What are the prices of similar products?
  2. How much more or less valuable do they think my product is to those alternatives?

One of the big questions that we see organizations wrestle with a lot is how best to approach discounting. A consistent challenge for sales managers and their teams, there is an inevitable struggle of trying to understand the best way to handle discounting and competitive price matching both in the long-term and short-term.

Supply chain and procurement teams, in particular, are trained to do this as part of their negotiation tactics. Team members might position negotiations with a vendor to make them believe they will walk away if a lowered price isn’t agreed upon…which ends up creating a familiar scenario. And even across industries and sectors, this probably sounds like something you’ve encountered before. Sales reps are often put into challenging positions during the negotiation phase of an opportunity. …

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