Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

How do startups and small companies determine prices for their products/services?

I have a sense that many entrepreneurs, especially novice, struggle with setting up prices for their products/services. The most popular benchmark seems to be "what others do." Often they go for freemiums but then face problems with switching to the paying mode. What is the right approach to choosing optimal prices? Is freemium (always) the right model to start?

3 Replies

Rodrigo Vaca
1
0
Rodrigo Vaca Entrepreneur • Advisor
Product & Marketing
Eugene - I've marketed/sold under both models.

As with anything, it depends, primarily what kind of product you're talking about.

In the context of software/SaaS, I do believe freemium can work quite was as an acquisition strategy. It worked very well for us at Zoho, and we consistently get higher-than-average free-top-paid conversions.

To make freemium work, I suggest you consider the following three things (at least, there will be some others I can't think of right now):

- Freemium from the start. It can be very difficult to switch from only-paid to freemium. You could lose revenue in the short-term, which might be painful.

- Meaningful paid features. This sounds like a no-brainer. However, look at Trello. Their initial "paid" edition gave you... stickers! You could tell they didn't plan that well.

- Onboarding, ease-of-use, etc. All of that is true under a paid-only model, but becomes twice as important under a freemium model since you're betting customers will absolutely LOVE your product in order to switch to paid.

Most importantly, remember freemium is not a business model. Freemium is not a pricing model. Freemium is just a user acquisition tactic.

As for your overall question about choosing optimal prices... I love pricing challenges myself, but it is hard for me to speak in general terms without a specific market at hand. A related reading you might enjoy if you're inclined to think about pricing is Priceless, by William Poundstone.

Good luck!


Karl Laughton
0
0
Karl Laughton Entrepreneur • Advisor
VP of Finance at Insightly
Hi Eugene,

If you've already got a customer base (paid or free) and this is strictly a pricing question, we used the folks at Price Intelligently and absolutely loved them / continue to love what they are doing. Happy to make an intro if you'd like.

Best of luck,

Karl

Eugene Ivanov
0
0
Eugene Ivanov Entrepreneur
Open Innovation & Crowdsourcing for Small Businesses
Rodrigo and Karl,

Thank you for your very useful responses. Much appreciated!

Best,
Eugene
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?