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Product Management
Nadav Benedek
Pricing Methods
Product Management | Pricing Methods Nadav Benedek
Our mission is lorem ipsum dolor sit amet, consectetur adipiscing elit.
Why now?
+60% teens will
regularly wear a
connected
device by 2016
How should
we price our
products?
Product Management | Pricing Methods Nadav Benedek
Value Pricing
What is the value for our
customer?
● How much time/money are we saving
for our customers?
● What is the WTP (Willingness To Pay)
of our customers?
● Can we apply Price Discrimination, or
must we present an equal price for
everyone?
Product Management | Pricing Methods Nadav Benedek
Cost+ Pricing
How much does it cost for us?
● How much does it cost for us?
● What is the desired margin?
● Don’t forget Fixed Costs & Marginal
Costs. Total cost changes, and it
depends on quantity.
Product Management | Pricing Methods Nadav Benedek
Competitive
Pricing
Comparing our pricing against
our competitors’.
● Is our product identical to our
competitors’? Is it different? Can it be
different?
● If we price too low -> Price Wars.
● How many competitors do we have?
What are the minimum & maximum
prices out there?
● Do we really want to be the cheapest?
Product Management | Pricing Methods Nadav Benedek
Psychology
Get into the minds of our
customers.
● Sometimes a higher price can signal a
higher quality.
● What’s our messaging?
● If we are the cheapest, what does it
mean? Will our customers believe that
we’re both the cheapest and the best?
Product Management | Pricing Methods Nadav Benedek
Slack
Have we left enough slack?
● Have we left enough slack for potential
discounts?
● What about partners, distributors and
resellers? Do we have enough slack for
them?
● What about agents? If we have agents,
we should have enough room for
commissions...
● Leave slack for special promotions.
● Remember: It’s easy to decrease the
pricing, but increasing it is not always
easy...
Product Management | Pricing Methods Nadav Benedek
Experimental
Pricing
Can we play with our prices and
see the effect?
● Price Elasticity. If we change the price,
what will be the effect on the quantity we
sell?
● Revenue = Quantity x Price.
● Will inconsistent pricing make our
customers angry?
● Can we A/B test it?

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Product management | Pricing Methods

  • 2. Product Management | Pricing Methods Nadav Benedek Our mission is lorem ipsum dolor sit amet, consectetur adipiscing elit. Why now? +60% teens will regularly wear a connected device by 2016 How should we price our products?
  • 3. Product Management | Pricing Methods Nadav Benedek Value Pricing What is the value for our customer? ● How much time/money are we saving for our customers? ● What is the WTP (Willingness To Pay) of our customers? ● Can we apply Price Discrimination, or must we present an equal price for everyone?
  • 4. Product Management | Pricing Methods Nadav Benedek Cost+ Pricing How much does it cost for us? ● How much does it cost for us? ● What is the desired margin? ● Don’t forget Fixed Costs & Marginal Costs. Total cost changes, and it depends on quantity.
  • 5. Product Management | Pricing Methods Nadav Benedek Competitive Pricing Comparing our pricing against our competitors’. ● Is our product identical to our competitors’? Is it different? Can it be different? ● If we price too low -> Price Wars. ● How many competitors do we have? What are the minimum & maximum prices out there? ● Do we really want to be the cheapest?
  • 6. Product Management | Pricing Methods Nadav Benedek Psychology Get into the minds of our customers. ● Sometimes a higher price can signal a higher quality. ● What’s our messaging? ● If we are the cheapest, what does it mean? Will our customers believe that we’re both the cheapest and the best?
  • 7. Product Management | Pricing Methods Nadav Benedek Slack Have we left enough slack? ● Have we left enough slack for potential discounts? ● What about partners, distributors and resellers? Do we have enough slack for them? ● What about agents? If we have agents, we should have enough room for commissions... ● Leave slack for special promotions. ● Remember: It’s easy to decrease the pricing, but increasing it is not always easy...
  • 8. Product Management | Pricing Methods Nadav Benedek Experimental Pricing Can we play with our prices and see the effect? ● Price Elasticity. If we change the price, what will be the effect on the quantity we sell? ● Revenue = Quantity x Price. ● Will inconsistent pricing make our customers angry? ● Can we A/B test it?