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213 pricing and packaging pricing strategy (chris kirsch)

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ProductCamp Boston May 12 2018

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213 pricing and packaging pricing strategy (chris kirsch)

  1. 1. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.1 © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES. Pricing Strategy: How to Price & License Your Product Chris Kirsch Director, Product Marketing, CA Veracode
  2. 2. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.2 What’s in it for you? • Make the number • Grow profitably • Keep sales happy • Accelerate pipeline • Grow & retain customers
  3. 3. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.3
  4. 4. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.4
  5. 5. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.5
  6. 6. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.6
  7. 7. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.7
  8. 8. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.8
  9. 9. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.9
  10. 10. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.10 #1 – New Markets
  11. 11. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.11 Value Metric The measure by which you sell your product Litmus Tests Easy to explain & understand Easy to scope for a quote Scales well with value received Easy to count and enforce by your solution
  12. 12. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.12 Do the Value Metric First Interviews with customers Surveys to confirm
  13. 13. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.13
  14. 14. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.14 Gross Margin Customer ValueCompetition $ Price Level
  15. 15. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.15
  16. 16. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.16 Pricing Sensitivity Measurement aka Van Westendorp Good for early markets At what price would you consider a ticket to a Rihanna concert to be... ...priced so low that you would feel something is wrong with the ticket? ...a bargain—a great buy for the money? ...starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? ...so expensive that you would not consider buying it?
  17. 17. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.17 Acceptable Price Range Source: Conjoint.ly
  18. 18. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.18 Revenue vs. Price Source: Conjoint.ly
  19. 19. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.19 Packaging Figuring out product tiers
  20. 20. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.20 Feature A Feature B
  21. 21. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.21 Force a Trade-Off OR
  22. 22. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.22 Max-Diff Conjoint Analysis Source: Price Intelligently Feature A Feature B Feature C Feature D Feature E Feature F Feature G Feature H Random
  23. 23. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.23 Max-Diff Conjoint Analysis Source: Price Intelligently Low Preference High
  24. 24. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.24 Finding the Price Fence Source: Price Intelligently Pricing Fence
  25. 25. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.25 Product Tiers Feature Business Edition Enterprise Edition Accuracy   Actionability   Uptime  Depth   Price $ $$
  26. 26. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.26 Applying the Intent Scale • 70-80% of “Very Likely” • 30-50% of “Somewhat Likely” • Ignore the rest Likelyhood to Buy
  27. 27. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.27 #2 – Established Markets
  28. 28. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.28 Choice-Based Conjoint Analysis
  29. 29. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.29 Choice-Based Conjoint Which cell phone plan would you pick? Option A Option B Option C None Price $70 $50 $30 Data Included 500MB Unlimited 10GB International Minutes 300 90 0 SMS included Unlimited 300 300 Your Choice    
  30. 30. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.30 Relative Importance Source: Conjoint.ly
  31. 31. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.31 Relative Value by Level (Partworth Utilities) Source: Conjoint.ly
  32. 32. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.32 Understanding Partworth Utilities • Stack up all utilities like lego blocks to create any product/feature/price combination • Tallest tower wins! • Aggregate utilities great for overview • Individual utilities used for market simulations $30 300 SMS 10GB $70UltdSMS1GB Preference
  33. 33. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.33 Marginal Willingness to Pay Source: Conjoint.ly
  34. 34. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.34 Preference Share Simulation Source: Conjoint.ly
  35. 35. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.35 Top Performing Combinations Source: Conjoint.ly
  36. 36. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.36 Segmentation Source: Conjoint.ly
  37. 37. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.37 Simulating the Market Current Market Market A Market B Market C Market D Competitor A • • • • • Competitor B • • • • • Feature Set A • • • Feature Set B • Feature Set C • Feature Set D • Feature Set E • Our Revenue $10.0M $17.4M $7.0M $10.4M $8.6M
  38. 38. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.38 Surveys
  39. 39. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.39 Anatomy of a Survey Research Questions Segmentation Questions Screening Questions Screen out wrong people Slice & dice answers What we actually want to know
  40. 40. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.40 Sourcing your Survey List Marketing DB Marketing Lists • Free • Best results for us so far • Sample bias • Respondents not incentivized – need additional incentive • Usually right audience • Pay for name and email • Respondents not incentivized – need additional incentive • Mostly not recommended Panels • $25 to $75 per response • Pay for response • Respondents paid for responding • Quality? Screening questions! • Recommended: SSI
  41. 41. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.41 Product Lifecycle Pricing Strategy Concept Features Development Market Adjust Viability Price Point Segmentation Preferences Packaging Licensing Engine Forecasting Impact Testing When to Start Pricing Initiative
  42. 42. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.42 Survey Tools Overview Simple Survey Max Diff CBC Conjoint Price Survey Monkey    $372/year SurveyGizmo Market Research License   * $1,500/year Conjoint.ly    ~$1,000/experiment ~$4,700/year Qualtrics    Simple Survey: $5000/year MD & CBC: +$10,000/year Pricing Consultant    $30,000+ Recommendations: SurveyGizmo + Conjoint.ly = $1,500 to $6,200 per year Or New Qualtrics license ~$5,000 * CBC questions are fine but analysis is very weak. Requires Marketing Engineering for Excel (MEXL) license for proper analysis, which is cheap ($100/month) but very hard to use.
  43. 43. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.43 Resources • Monetizing Innovation by Madhavan Ramanujam and Georg Tacke • Price Intelligently Blog about SaaS pricing • The Strategy and Tactics of Pricing by Thomas T. Nagle, John Hogan, Joseph Zale • Getting Started with Conjoint Analysis by Bryan K Orme
  44. 44. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.44 Q&AQuestion? 99¢ each @chris_kirsch www.linkedin.com/in/ckirsch

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