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A BLOG ABOUT STARTUP STRATEGY & FINANCE

Cost plus and competitor based pricing models are useful, but they are of no reprieve in the age of global SaaS business. You and your startup have access to more data than ever before. You need to take advantage of the digital sales channels and analytics to develop tangible insights about your customers, competitors and markets.

Value based pricing entails determining the price of a product based on what the customer is truly willing to pay.

Defining Value

Value based pricing, in its most simple...

Think like a consumer for a second here, you are at a department store and you want to buy Salt. There is a department store labelled Salt that costs a few bucks lower than a branded one. How does one choose? What are the things to consider when buying one of the two- you might have had better experience with the branded one, one can be healthier, one may be better packaged. The question you need to ask is how the branded one justify the higher price of a few bucks to you. There are no universal...

Pricing is a matter of perception. Lets see how you can hack your way to higher conversion while also increasing the price.

1. Magic of 9

Marketers have used the magic of 9 for way too long. Look at the conversion rate of Gumroad. 

You’ll notice that prices ending in .99 have higher conversion rates than prices ending in one cent higher.

Today $5 has become the modern equivalent of 99 cents. The sites like Fiverr work on the same principle.

2. Reduce the left digit by 1

In the above chart, you’ll also...

Pricing sounds deceptively simple but is surprisingly complex to get ‘right’. Your pricing strategy can augment your sales, or it can devour the very foundation your business is built on. The good news is there are various pricing strategies available for all kinds of products, businesses & markets. This is also the bad news.

Understand Business Priorities

The CEO needs to understand what is it that the business wants to accomplish, whether it is just the profits or anything else. If it is the mar...

There is a growing acceptance of why recurring revenue is special. Founders now understand that not all revenue is created equal. The more predictable the revenue, the more valuable it becomes. In VC parlance, it is not a little bit better than non-recurring models, but 10x better. Many VC firms are adding weight to recurring models with high gross margins as evaluation criteria, along with market & team.

What makes this business model so valuable is that you can invest more of your time towards...

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