PRODUCTHEAD: Pricing – everything and nothing has changed

PRODUCTHEAD: Pricing – everything and nothing has changed

PRODUCTHEAD is a regular newsletter of product management goodness,
curated by Jock Busuttil.

pulk/pull revolving products #


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Despite that, companies continue to apply outdated or ill-suited pricing models, copy their competitors, or pluck a number out of the air without any consideration of their customers’ perception of the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

A proportion of the fees from every coaching session is donated to charity. Contact us if you’re interested in finding out more.


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]

upcoming talks and events #

5th May 2021, 16:00 GMT

Threads

Online product management round table discussion (topic TBC)

Tickets

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

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.

Jock is a freelance head of product, author and conference speaker. He has spent nearly two decades working with technology companies to improve their product management practices, from startups to multinationals. His clients include the BBC, University of Cambridge, and the UK's Ministry of Justice and Government Digital Service (GDS). In 2012 Jock founded Product People Limited, a product management consultancy and training company. He is also the author of the popular book The Practitioner's Guide to Product Management and the blog I Manage Products.

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