by David Strom
In the past week, I have spent way too much time dealing with product
pricing issues on a number of fronts. It shouldn't be so hard to get a
price - my motto is that the harder it takes to find out pricing, the
less motivated customers are going to be to buy it.
Let's give you some circumstances. I am back again reviewing products
for eWeek (please, don't all email me about your products, PR folks).
For one review, it took four days, 10 emails and phone calls to get
the actual price of the product. The PR person initially sent me
something that looked like Egyptian hieroglyphics that didn't make any
sense to either of us (why did she send it, you might reasonably ask).
Of course, the vendor didn't have any prices on their Web site, at
least not that I could find.
As a journalist, this gets my goat. I often hear, "We don't want our
competitors to know about our pricing." Or "We use multiple tiers so
our VARs set their own prices." Hogwash. What these vendors are really
saying, "We don't have a clue what to charge for our product/service."
Shame on them!
For a client, I was recently working with them on their plan for their
new software release. One of my issues is its current pricing model,
which has five degrees of freedom:
* Number of PCs supported
* Three different "levels" or overall pricing tiers
* Overall capacity
* Two different software versions
* Other surcharges for extra features
That works out to many thousand different prices. You need a
spreadsheet to figure out what you are going to pay. Now, granted,
there are some complex software products out there and you don't want
to leave money on the table and charge fairly for your product. But
five different knobs to turn before you can calculate a price? Not
good.
I was a judge in a local competition put on by our county economic
development office to pick wining business plans that would receive a
nice $50k cash prize. In the five semi-finalist plans that I reviewed,
three of them were missing pricing information. The plans were well
thought out, had plenty of detail about the company's prospective
businesses, and even had copious pages of spreadsheets showing how the
business was going to make tons of money in year 4. But without the
actual price of the product or service, this information is just a lot
of hot air. How can you tell if your business is going to be
competitive? What is the sensitivity of your price to your market? I
asked these questions of my semi-finalists and you could see that they
just didn't make the connection. Uh-oh.
So folks, here's my advice. Keep it simple. Better yet, make a free
version available for a limited time or a limited number of users or
PCs or whatever. And if you can't put your prices online where your
customers can see them, then you shouldn't be in business.
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