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Establishing a pilot price

I'm in the process of establishing a subscription price for my pilot along with the actual features. I'm sending out a survey to all my potential piloters to gauge their interest in all the possible features. However, my question is, should I include a question of how much they would pay for the pilot? In conversations, I have gotten a different answer about the price from everyone I speak to. And, it seems like something that should be established over a discussion rather than a survey question. I definitely don't think it should be a multiple choice, but, perhaps a pure text answer so as to not influence them as to the price.

What are your thoughts?

10 Replies

Clay Kramer
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Clay Kramer Entrepreneur
Product Strategy | Monetization | Mobile | Consumer Health & Wellness Startup Advisor
You can do a few things on pricing. First try to understand the value that you are creating - how much they save or how helpful such a service is in their life (does this eliminate 2 hrs of work for them?). Are there any comparable services? If you were to do a survey, it may be hard to get the right pricing by asking people. Instead of asking them how much they would pay, consider asking them how much such a service costs. Better approaches would be to do a conjoint, discrete choice experiment, or a Van Westendorp price senstivity (which is a survey method). http://en.wikipedia.org/wiki/Van_Westendorp's_Price_Sensitivity_Meter Thanks, Clay --------- Clay Kramer tel: +[removed to protect privacy] LinkedIn Twitter
Shobhit Verma
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Shobhit Verma Entrepreneur • Advisor
building an adaptive recommendation engine
My comments maybe more relevant for final pricing instead of pilot pricing.
It helps if you have a way to ask the value of your product in other units.
For example, if it is a service to arrange a hassle free catering for their group (zero cater), try to find how many caterers do they have to usually call for each meeting before they can finally settle on something they like. Or how many times they have to organize for catering services in a month.
If it is something that saves them time, try to figure out how much time and effort it takes them to do it currently (without using your product.)
If it saves or makes them money, try to ask another question from which you can infer some proxy estimates for these indirectly (asking directly is a bad idea).
Finally, for a pilot pricing, I don't know why everyone has to see the same price. There is an opportunity to do an A/B testing ?


Clynton Caines
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Clynton Caines Entrepreneur
SharePoint Developer at Discover Technologies
Hi,

If this service is super new, never before seen, etc... then it's probably difficult to gauge. However, you're likely solving a problem thatcustomersalready solve in different ways (hint: these other options are your competitors). One strategy is to see what customers are paying for these competing options, then decide how much more valuable your solution is (ex: in terms of time/money saved)... then value-price accordingly.

Note: I don't believe cost-based pricing is a good idea, because it's too easy for competitors to come in and beat you... and if you've attach the visible-costs directly to the end-price, your precious customers might be convinced to leave you too easily.

However you do decide, you should consider reaching out to potential customers directly - a percentage at a time, and use the insights from one iteration to influence the questions you ask the next set. Once you start closing in on a price reduce the options you suggest. By the time you reach 50% of initial targets, you should have a good idea of the price that fits.

Finally, it might be a good idea to offer free trials/etc to beta customers - letting them know they'd be helping you. Timing and what's offered depend on how much you expect to charge of course - and your runway... But these early users might allow you to (with their permission) say "we've got abc using it" when you talk to def.

jm2c
Good Luck!
Trevor Collins
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Trevor Collins Entrepreneur
Crowdfunding Entrepreneur & Co-Founder of 100 Danish
I had a couple thoughts about pricing from a different vantage point.This relates more to positioning then to nailing down a precise dollar amount in your pilot.

It could be useful to first take your overall market and niche down to who derives the most value from the service. Especially since pricing should come from the customer's perceived value. Then find a price that is still 'premium' but is still a no-brainer decision for that customer niche.

Here's an example:

Let's say I sold an online service that brought a business 10 more clients every month through my extra-special marketing engine. I first start selling to plumbers. And for them, each customer is worth, on average, $300. So they can gain an extra $3000/month using the marketing engine. If you charge $1800/month for that service, it might logically make sense. However, their impetus to sign up will still be low and sales will trickle in.
But now I decide to sell to chiropractors. Let's say their customers, on average, are worth $3000. They now have a gain of $30,000/month. Now this niche is absolutely in love with your special marketing engine they are paying $1800/month for. For them, it just makes sense.

(slightly more extreme example to help illustrate the point)

In general, it's great if you can construct a larger and believable price build-up for what they are paying for or giving up without your service. Then if you are first targeting the right niche, you can offer a 'steal' that is still set at a more premium price level.

I hope this lends some useful perspective. Cheers, Trevor.
Craig Green
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Craig Green Entrepreneur
E-commerce Consultant
I'm pretty sure people will answer as low of a price as they can imagine -- which will be bad for you. Are there comparable you can look at? How large is your pilot pool? If they're too small a group your sampling averages and standard deviation ranges will be so out of whack that they'd be essentially useless. C
Paul Travis
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Paul Travis Entrepreneur
Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development
In line with Craig's comments... as a marketing consultant and entrepreneur, I've always broken up the survey into 3 segments and given each segment its own price point. As long as things are statistically significant, you'll notice where you have noticeable falloff.
Helen Adeosun
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Helen Adeosun Entrepreneur
Co-Founder and CEO of CareAcademy.co
Aleksandra, I am running into the same issue, and it's kind of pointless asking people what they'd pay until they can see and justify the value (this is just my opinion and lesson learned). Look for pricepoints of anything comparable and I would recommend a smoke test, I am about to do this with a couple trainings that we are going to offer this summer...what would our caregivers pay for a 6 week course when in person trainings are around $300. I am going to do a landing page with some features listed (keep in mind I haven't created any of this) but I am thinking $150- $200 also bearing in mind it may cost me a $1000 up front actually create and write the curriculum (upfront costs). This is just an example of how I'm finding the pricepoint. So in summary: 1) Looking at competitors 2) Looking at cost 3) Talking up some features and seeing what sticks with a sample group Best of luck and please provide updates [removed to protect privacy] Thanks, Helen A
Aleksandra Czajka
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Aleksandra Czajka Entrepreneur
Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack
All,

Thank you so much for your insights. These are all very valuable.

There really isn't a competitor price I can take a look at. Competitors exist, but, they are particular to certain features. Meaning, Competitor #1 can provide one feature of what I'm building, but, not the whole thing and Competitor #2 will provide a different features.

In addition, it's not straight forward to gauge how much the product would save my clients or how much clientele it would bring. It's basically an organizational solution to make life easier for my pilot customers.

I think my problem stems from the fact that the actual value and price will be outlined with the pilot with the help of my pilot users. The pilot price is another thing. I'd rather quote it low and maintain my pilot users, rather than quote it higher and lose some of them. The value that their bringing at this stage of the project is invaluable.

All my best,
Aleks

Craig Green
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Craig Green Entrepreneur
E-commerce Consultant
It is always easier to lower a price in the future rather than raise it. You will only ever have downward price pressure. Craig Green [removed to protect privacy]
Aleksandra Czajka
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Aleksandra Czajka Entrepreneur
Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack
Craig, that only applies if you're broadcasting your pilot price with every one of your future clients. This is not the case.
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