Revenue and Pricing

Our Pl8tes team has been working towards the goal of neighborhood resilience for emergencies, creating an online tool that help small groups of neighbors (a large building, or a small block), prepare for an earthquake together.

But how do you price something like that?

Even before we started formulating our plan, we posted twice on next door and once on reddit trying to get eyes on our landing page — with the value proposition and a way to sign up online. Some people loved it, and some smelled something that they didn’t like and were not shy to say so.

You see, what we’re doing doesn’t have a direct competitor, but it has what is called signposts, or proxies. In San Francisco there is an organization called NERT, run by the SFFD, and that is some customers’ reference point. And it’s free.

What we’re doing is not like NERT, and we’re a big fan of NERT, but in the eyes of some of our future customers, the price they’re comparing us too is FREE.

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

So, how do we address this?

According to the wonderful book by Neil Davidson, sketchnoted here, 1 thing we can do is work on increasing our Perceived Value:

What of these is the most relevant for our project?

  • Selling more than just the physical product — we can market the added value of building a community, of being able to rely on your neighbors, on feeling safer and more prepared.
  • Differentiating our product — Definitely. A major insight is that our value proposition on our website is not clear enough to tell us apart than NERT.

What else can we do?

One other major thing we can do, is in another area. Instead of changing the product, so it will make sense to give it away , we can change the our revenue model and pricing model. We can go with FREE — try to make money in other ways in addition to our main free offering.

Neil Davidson covers that in detail in his book, and we also reviewed other lists and articles about different pricing ideas and revenue models: this one, that one, and this one.

So, we started making a plan (on stickies.io) — asking ourself hard questions (mostly based on Davidson’s checklist in his book), organizing our thoughts and ideas, and choosing one to test.

Don’t read all these post-it notes, you got better things to do.

And the journey continues — can we find a pricing plan that will seem fair? Can we validate it?

Davidson says this at the end of his book:

Make an informed guess at your price: Despite all the psychology and economics, you ultimately just have to pick a price. Some price — any price — is better than no price.

And then he pushes us out of his nest. TRY IT OUT, he says.

Reading list for this post:

Don’t Just Roll The Dice, by Neil Davidson
My Sketchnotes of the book above. 
Revenue model types: the quick guide
The ultimate master list of revenue models used by Web and Mobile
+50 BUSINESS & REVENUE MODEL EXAMPLES