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Raise your prices to sell more

50 点作者 pytrin超过 12 年前

13 条评论

3stripe超过 12 年前
Back in the real world of things, I ran an experiment recently with t-shirts, and created a 'Premium' design to sit alongside my existing design which I renamed 'Classic'.<p>The new tees were priced at £35 instead of £25, and I was expecting them to increase sales of the Classic tees, but actually the Premium tees sold waaaaaaay faster.
erock超过 12 年前
This isn't just related to software. I remember reading a few years ago an interview with Henry Juszkiewicz, the CEO of Gibson guitar (here <a href="http://usatoday30.usatoday.com/money/companies/management/2006-02-20-forum-gibson_x.htm" rel="nofollow">http://usatoday30.usatoday.com/money/companies/management/20...</a>) The quote is "I said we are going to increase prices. Prices were ridiculously low. And people said, the price has been decreasing 20% a year, how can you reverse that? I said I'm just going to double the prices on a lot of models. I actually tested it and got an inverse price curve. Basically it showed that every time I raised prices a certain amount, volume would go up."<p>Not sure how many people play guitar here, but Gibson's quality has slipped a lot since then, yet they are still raising prices, and I imagine volume is still increasing because of it.<p>Personally, I build my own guitars :)
true_religion超过 12 年前
Well anecdotal story, one of my side businesses is in selling direct-downloads to zipped content (ala megauploads). We doubled our prices so we're now twice as expensive as any direct competitor and sales went <i>up</i>, not down.<p>I think in many cases prices act as a signalling factor as to quality.
jeremysmyth超过 12 年前
All that this tells me is that they were underpriced to start with.<p>In any market where I sell a product and other people can sell an equivalent product, the market settles around a value that varies only as much as reputation allows. If company X has been around for 15 years and you've already bought several of their products (at your current company or a previous one) and found them reliable, that's worth a premium. Otherwise, not so much.<p>Software components are an even more challenging product to sell, because your customers are sometimes also your biggest competitors; if I see a vastly overpriced component that I know would take me two and a half days (max) to code and test, I'm not going to pay through the nose to buy from an unknown vendor. Add to that "not-invented-here" syndrome, misplaced management concerns about ownership and support, and you end up with components being a hard sell in some orgs.<p>So, like I say, I can only assume they were underpriced to begin with, and I'm glad to see they're doing research to find their correct price point.
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MereInterest超过 12 年前
"Do you think that raising your prices by 50% will hurt your sales by 50% or more?"<p>For an article claiming to treat pricing like a science, this sentence stood out. If you raise your prices by 50% (to 1.50 of original) and hurt your sales by 50% (to 0.50 of original), you'll only have 0.75 of your original income.
jasonkester超过 12 年前
Obligitory Disclaimer: Test and verify.<p>I actually have a datapoint from one of my SaaS products showing the exact opposite conclusions from this article: Doubled prices, sales dropped to ~25% of their previous levels. Dropped prices back, sales came back.<p>But don't make any decisions based on that either. A few years earlier, I doubled prices for that same product and didn't see any sales change at all.<p>So go ahead and experiment with different pricing, but be sure to wrap it in an A/B test. Look at the actual numbers and let that make the final decision for you.
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dmgrow超过 12 年前
When considering pricing for software, it's important to consider more than just the initial sale. It needs to be a comprehensive view of customer lifetime value.<p>One of the critical things in my current business is the upgrade path for customers. We have many customers who start with one license but quickly scale to 5, then 25, then 50 and beyond.<p>Having a lower price point to get people into your product can be a very effective strategy if there is a clear upgrade strategy for each customer.
c2prods超过 12 年前
Very interesting article. I think it can even be extended to other kinds of software. I've faced this question on the App Store, which is, of course, a totally different market My experience is that pricing an in-app purchase at 0.99$ or 1.99$ does not change anything as long as it brings a significant added value to the app. It clearly is important not to lower our prices too much. I think the TV industry (Panasonic, Sony...) should be a reminder that we can not indefinitely lower prices.
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jebblue超过 12 年前
I guess it can work but don't go too high. We love cable TV but dropped it because it was too expensive. Why pay extra for HD when it's free over the air? Paying for the features they can provide that you can't get with free over the air, ok makes sense. Paying for something that's already free? We grew tired of that. That and all the charges getting added in recent years that made no sense whatsoever.
jacques_chester超过 12 年前
Pricing is a big topic. It's time for my obligatory remark about how those of us who sell software or services should give it more attention.<p>Consider these questions:<p><pre><code> Node or Rails? JavaScript or CoffeeScript? LESS or Compass? Foundation or Bootstrap? PaaS or self-hosted? </code></pre> What do all these questions have in common?<p>That, compared to your pricing strategy, they are pretty close to <i>irrelevant</i> as predictors of your profitability.<p>And now for the obligatory link to a book review on my blog, where hopefully some of you will click through to Amazon and net me $2: <a href="http://chester.id.au/2012/09/12/review-the-strategy-and-tactics-of-pricing/" rel="nofollow">http://chester.id.au/2012/09/12/review-the-strategy-and-tact...</a><p>You may also like <i>Don't Just Roll The Dice</i> [1], which is about software pricing. And it's worth reading. But to be honest, Nagle et al is better and much more complete; it's worth paying for.<p>[1] <a href="http://neildavidson.com/download/dont-just-roll-the-dice/" rel="nofollow">http://neildavidson.com/download/dont-just-roll-the-dice/</a>
fduran超过 12 年前
<a href="http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html" rel="nofollow">http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...</a>
danso超过 12 年前
I don't think we know enough about the OP's market and competition to be able to agree with the title's conclusion...as others have pointed out, the OP may have just been underpriced to begin with.<p>An obvious counterpoint: I doubt higher prices has any correlation with sales numbers in the iOS market. And while there are successful high-priced games (Minecraft at $6.99), that's because they are high quality games. I think Minecraft would undoubtedly sell more units if it were at $2.99.<p>Another thing to consider is the psychological "anchor effect"; Dan Kahneman (Nobel Prize in Economics) conducted a famous experiment in which college students were influenced by a number <i>they knew to be completely random</i>:<p><pre><code> Amos and I once rigged a wheel of fortune. It was marked from 0 to 100, but we had it built so that it would stop only at 10 or 65. We recruited students of the University of Oregon as participants in our experiment. One of us would stand in front of a small group, spin the wheel, and ask them to write down the number on which the wheel stopped, which of course was either 10 or 65. We then asked them 2 questions: 1. Is the percentage of African nations among UN members larger or smaller than the number you just wrote? 2. What is your best guess of the percentage of African nations in the UN? The spin of a wheel of fortune – even one that is not rigged – cannot possibly yield useful information about anything, and the participants in our experiment should simply have ignored it. But they did not ignore it. The average estimates of those who saw 10 and 65 were 25% and 45%, respectively. </code></pre> From "Thinking Fast, and Slow" <a href="http://www.amazon.com/gp/product/B00555X8OA/ref=as_li_ss_tl?ie=UTF8&#38;camp=1789&#38;creative=390957&#38;creativeASIN=B00555X8OA&#38;linkCode=as2&#38;tag=danwincom-20" rel="nofollow">http://www.amazon.com/gp/product/B00555X8OA/ref=as_li_ss_tl?...</a><p>The summary: there is room in setting initial prices to convince people think they <i>should</i> be paying a higher price.
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adventured超过 12 年前
Step 1: build a good product<p>Step 2: have the luxury to raise prices