Pricing topics round up

26 08 2009

It’s time to look back at the ground we’ve covered in order to establish the road ahead.  In a series of strategy posts, I talked about the fact that if you don’t know where you’re going, any road will get you there.  I also said it was important to have a sense of purpose and continue to review the goals that you started with in order to see if they’ve changed.

Let’s review what has been covered so that readers can easily catch up with anything they’ve missed and also to plot the next post.

Human behavior

It’s only natural to look for the best deal.  That’s exactly what happens when you get down to brass tacks with any business negotiation.  Humans treat everything with lots of variables as a game.  We like to play with graphic equalizers because we think we can make our music sound better when we have a greater degree of control over the gain of each frequency band.

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Human nature and software pricing (#2) – let sales do their job

25 06 2009

Deep in the process of pricing, in the midst of the miasma of spreadsheets, whiteboards, and scenario development, the pricing master will teeter on the edge of sanity.  Combinations of customer situations, past corporate agreements, and product development plans will swirl and form into transient clusters of pricing policy and licensing metrics that must be analyzed and evaluated.

Let’s talk about that for a second because it sounds like I’m out of my mind.  But we’ve been there… the vortex of information that surrounds pricing can overwhelm the senses and make good ideas indistinguishable from disastrous ones.

While I do believe that to know pricing is to know madness at times, pricing will always drive you to that point if you forget this simple rule:

Let sales people do their job.

Sales can be your ally, but you have to involve them in a specific way in order to bring about the best results for you, the company, and their commission.

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Human nature and software pricing (#1)

10 06 2009

For over seven years, it was my responsibility to price a complex software product.  I didn’t expect it to be a place to learn about the psychological interplay of rules and human relationships.

Over the next several posts, I will share what I’ve learned empirically.  No, there is no pricing magic wand.  However, if you’ve searched the product management literature and the Internet, you’ll find that very few people have discussed pricing anything more complex than single user software licenses or golf balls.

So let’s begin.

Pricing jujitsu and your evil twin

The customer is not your adversary.  Yes, you are trying to extract money from their wallet.  But your job is to quantify the value of your product so your sales force and customers can come to a long-term, mutually beneficial agreement.

This is why complex software never gets sold for list price.

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