- Product pricing involves choosing from options like subscription models, SDK/RTU licenses, upfront vs usage-based pricing, free vs premium versions, and free trials. - Pricing should be based on what customers will pay based on how the product solves business problems related to time, risk, or money. Metrics include per user, transaction, deployment, or event pricing depending on market size and value proposition. - Price is a key part of the marketing mix and needs to be considered along with other elements like product, promotion, place, people, process, packaging, and payment. Price books set standard prices but discounts may be needed; channel margin also applies to discounted prices.

1. Product Pricing
Getting the most jam for your
products

2. My background
Over 15 years of Managing Products
• Product Management/Marketing
– ICL Enterprise Middleware, Peerlogic, IONA
Technologies PLC, Am-Beo, Prime Carrier,
Axiologix
• Product Launches, re-launches, mid-life
‘refreshes’, legacy and end-of-life
• However all generated product and service
revenue & taken market share

3. Product Pricing
• Minefield of options
– PLC, Annual Right-to-Use, Subscription models
– SDK/RTU
– Upfront vs. Usage based approaches
– Free version vs. Premium version
– Free time based Trial
• The only metric is what a customer will pay
– And only if it solves a business problem relating to
Time, Risk or Money

4. Pricing Metrics
• Per User
• Per Transaction
• Per Event
• Per Deployment
• Which is best depends very much on Market
size, value proposition, competitors

5. Keeping Price as part of the Mix
• Price is a key element of the Marketing Mix
– Not just the basic 4 P’s, but the 9 P’s for Service delivery
• Product
• Price
• Promotion
• Place
• People
• Process
• Physical Evidence
• Packaging
• Payment
– If you adjust one element of the Marketing Mix, you need
to adjust the rest of the Mix

6. Price Books
• Useful to set the Standard Price for your
Product and portfolio of Products
• However not to be treated as a Price Bible
– As prices may have to be flexible to win business
– Commission is paid on achieved price
– Channel margin is also applied to achieved price
• Try and make Discounting an exception rather
than the norm

7. Up-sell
• Design Price Tiers into your pricing
– Increased usage = more €
– More users = more €
– Ensure that if a Customer Company is acquired then
price can be revisited for use by the acquirer
– Additional functionality = more €
• Modularize your products, into value-adding elements built
on a core platform
• Sell the platform, then sell the individual functional
elements
• Standard Editions, Enterprise Editions, Premium Editions
• Different versions for different OS platforms

8. Major/Minor Releases
• Charge for any new release
– Modular additions/plug-ins
• Bug fix versions must be delivered under
current Support Contracts
• If you are delivering free versions, giving
support for free, delivering free updates,
unless there is a huge up-sell or exit strategy
or significant strategic reason

9. ‘Fremium’ model
• Limited functionality at ‘No Charge’ or time-
based trial
– Can be difficult to make work, as you have
devalued your product from the outset
• Market now expects it for €0 & wants it supported
• Hard to change perception
– Could deliver 90% of value proposition with no
hope of up-sell post Trial or paid-for version
– Works in large-volume markets
• E.g. App Stores, ‘selling’ to millions with low cost of sale

10. Product Pricing
• Position Pricing carefully in the 4Ps or 9Ps mix
• Determine price based on the Market’s
‘perception of value’
• Build-in lots of pivot points & Tiers
• Use Licensing mechanisms to enforce
compliance – no pay, it no work
• Consider ‘Fremium’ / Time-based Trials
carefully as not to deliver Value Proposition
early