PRODUCTHEAD logo

PRODUCTHEAD: Pricing — everything and nothing has changed

pulk/pull revolving products

Posted on Monday, 18 January 2021

tl;dr

Pricing determines the structure of the business that produces it

Start with consumer research to determine potential demand and feasibility of the product

A step-by-step guide to pricing software

Scalpers have made $82M in sales of consumer tech in under three months

hello

When compiling my list of good reads on pricing this week, I was struck by two things.

First, many commentators seem to treat pricing as a standalone task. In contrast there’s relatively little written about how to approach pricing in the context of the broader product and corporate strategy.

Second, everything and nothing has changed about pricing strategies. An engaging article from 1950 in Harvard Business Review discusses many of the same considerations (skimming, penetration pricing, price elasticity, cost compression curves) that a 21st century startup would need to consider.

Despite that, companies continue to apply outdated or ill-suited pricing models, copy their competitors, or pluck a number out of the air without any consideration of their customers’ perception of the product’s value to them.

Pricing strategy is the result of drawing together many different threads: actual and perceived worth to customers, desired business model, standalone versus portfolio play, product longevity, inevitable commoditization — all to get to the point where you can put a price tag on your product.

So yes, pricing can be complex and difficult to get right. To help you this week, I’ve pulled together a selection of good reads to stimulate your thinking about it.

Speak to you soon,

Jock

what to think about this week

Pricing determines your business

Price is inextricably linked to brand, product, and purchasing decisions — by whom, why, how, and when.

Price is not an exercise in maximizing some micro-economic supply/demand curve, slapped post-facto onto the product. Rather, it fundamentally determines the nature of the product and the structure of the business that produces it.

Price is essential business design

[JASON COHEN / A SMART BEAR]

Pricing policies for new products

Pricing of new products remains an art. But the experienced
judgment required to price and reprice the product over its life
cycle to fit its changing competitive environment can be
improved.

Look at price through the eyes of your customer

[JOEL DEAN / HARVARD BUSINESS REVIEW]

Product management coaching

Whether you’re new to product management or have been a product manager for years, a coaching session can help you to step up your career.

We’ve coached people wanting to get into product management, product people with nobody in their organisation to manage them, and experienced product managers preparing to apply for a promotion.

We can help you prepare for your product manager interview, including mock interviews.

A proportion of the fees from every coaching session is donated to charity.

“Jock’s unique blend of soft skills and professional expertise has helped me improve in so many areas around product management.

“He took time to truly understand my challenges, helped me create a plan of actions, and then measured my progress along the way.

“He supported me with valuable information resources and made sure I understood what the problems were and how to solve them. Thank you, Jock!”

Razvan Braghesiu
Razvan Braghesiu
Product Manager, Safebridge

Find out more about product management coaching

Don’t Just Roll The Dice

You might have spent one hundred dollars developing your product, or a million, but that money is all spent. Gone. It’s a sunk cost.

What matters now is not how much you’ve spent, but what people are prepared to pay.

A usefully short guide to pricing [PDF]

[NEIL DAVIDSON]

An analysis of the $82 million eBay Scalping Market for Xbox, PS5, AMD, and NVIDIA

Scalpers (people who buy up stock of something purely to resell it at an inflated price to the original intended market) have made $82 million in sales, $39 million in profit since September 2020 on just 14 products on eBay.

It’s an astonishing insight into how companies’ carefully-crafted pricing strategies can suddenly go to s**t.

This is why you can’t buy a new XBox or PS5

[MICHAEL DRISCOLL / DEV]

Which is better: Many customers at low price-point or few at high price?

Companies A and B both sell products with recurring monthly revenue, and both brought in $10,000 in revenue last month.

Company A has 1,000 customers each paying $10/mo.

Company B has 10 customers each paying $1,000/mo.

Which is better? Or perhaps: which company would you rather own?

It all depends on your goals in life

[JASON COHEN / A SMART BEAR]

recent posts

The dirty little secrets of decision making

As individuals, we’re continually evaluating options and taking decisions. As product managers, we have the additional responsibility to balance the often competing needs of users, the business and wider ethical considerations. What makes one decision better than another?

How to make better decisions

[I MANAGE PRODUCTS]

Manage the whole product

A product is often a complex combination of several products and services. Some you create yourself, some are created by others. You’re responsible for the whole lot, even if they’re not all directly in your control.

What do Google, Tesla and Apple have in common with the Michelin Guide?

[I MANAGE PRODUCTS]

The only article you’ll ever need on prioritization

When faced with an overwhelming number of things you could be doing, all with good reasons for doing them, it can be tremendously hard to decide which to do, let alone which to do first.

Prioritization is all about deciding this as objectively and transparently as you can.

Break the deadlock

[I MANAGE PRODUCTS]

can we help you?

Product People is a product management services company. We can help you through consultancy, training and coaching. Just contact us if you need our help!

Product People Limited logo
Product People Limited logo

Helping people build better products, more successfully, since 2012.

PRODUCTHEAD is a newsletter for product people of all varieties, and is lovingly crafted from the ashes of failed food delivery startups.

--

--

--

PRODUCTHEAD is my free curated newsletter of the best articles, videos and podcasts from product leaders and commentators all over the world. All neatly packaged up in a weekly email delivery for your reading, viewing and listening pleasure. imanageproducts.com/subscribe

Recommended from Medium

Social Media Strategies: What are they?

What These Brands Know About Marketing That You Don’t

Learn the Easiest Ways to Improve Your Website’s Speed

Brighten Your Marketing Plan With A Weather Targeting Strategy

7 SEO Myths and Misconceptions That Refuse to Be Busted

The Top 4 Ways Brands Can Earn Real Loyalty in the New Year.

Discord Leveling System: AMA Recap

Not Everyone Who Bounces Is a Disappointed Visitor

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Jock Busuttil

Jock Busuttil

Freelance head of product, author & founder of productpeo.pl. My surname tends to come up as ‘Bushtit’ in spell-checkers. I also blog at imanageproducts.com.

More from Medium

The problem of EASE.

Frustrated man.

How to introduce your coworkers to Wardley Maps.

Unlocking Better Business Through Social Enterprise With Christopher Marquis

Putting Team Values Into Practice