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Pricing lies

Every pricing blog I read, they say the same thing. Take the price you’re considering and double it. Don’t worry about charging too much.

Lies. We listened to the advice and got bumpkus. We lowered our price and the signups started coming in.

I guess posting outrageous advice gets you clicks and shares. Listening to those advice could cost you.

  • Bloggers advise entrepreneurs to raise their prices because pricing too low is the more insidious AND the more common problem. Most of these blogs are targeted at nerds who really underestimate the value they provide. They ask themselves what THEY would be willing to pay for software, which is typically something like $7 a month, when they should be charging $100 a month or more. Pricing too high isn’t a problem, because you will get very loud feedback that your price is to high. But if you price too low you won’t get the analogous feedback.

    The correct way to figure out if your product is priced right is by raising the price until sales drop and then lowering it back a notch or two. Which is effectively what you did. So what’s the problem? Experimenting with different price points is completely normal.

    PS: there is no conspiracy where bloggers deliberately give bad advice in exchange for clicks. The lesson you should have taken away from this is that you shouldn’t blindly accept internet wisdom. The success rate for entrepreneurs would be a lot higher if blind acceptance of blog advice would work!

    Reply

    • +1 agree

      There is no immediate answers “this is the perfect price”, pricing depends on a lot of different parameters which might change, including the state of the economy, competition and other factors.

      Also keep in mind that people talk a lot while the day is long, you will get the ultimate feedback only when you actually sell the product for a given price. Nothing can replace this. Nothing.

      Ask someone (potential customer) “would you buy it for price x €” and watch their response, if they say yes say “ok, here is the product, give me x €” and suddenly you will get to know their personal real price point (and their excuses why all the sudden their original statement is void).

      Reply
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