In the legend of Icarus, his father creates wings to escape and warns him to not fly too high or too low. Sadly, he plunges from the sky.*
In the reality of startup sales, if you price too high then customers won’t buy, but price too low and the business won’t grow.
𝘏𝘰𝘸 𝘥𝘰 𝘧𝘰𝘶𝘯𝘥𝘦𝘳𝘴 𝘢𝘷𝘰𝘪𝘥 𝘧𝘢𝘭𝘭𝘪𝘯𝘨 𝘵𝘰 𝘵𝘩𝘦 𝘨𝘳𝘰𝘶𝘯𝘥?
𝗖𝗼𝘀𝘁𝘀 – Calculate the COGS, salaries, R&D, overhead, and debt servicing to know what you need. Use this to set minimums.
𝗩𝗮𝗹𝘂𝗲 – Define price in terms of value and how customers can better operate and grow business. Use this to set maximums.
𝗧𝗶𝗲𝗿𝘀 – Set tiers of prices (e.g. basis, plus, and premium options) to attract both price and value-driven clients.
𝗖𝗵𝗼𝗶𝗰𝗲 – Offer a selection of different products, features, and/or services at different prices allows customers to confidently decide.
𝗢𝗱𝗱 𝗡𝘂𝗺𝗯𝗲𝗿𝘀 – Recognize that while $9.99 is essentially $10, research shows that lowering price just a little has a huge impact.**
Pricing is both science and art. Avoid the fate of Icarus by soaring at the perfect height.
𝘛𝘩𝘪𝘴 𝘪𝘴 𝘵𝘩𝘦 𝘧𝘪𝘳𝘴𝘵 𝘰𝘧 𝘢 𝘵𝘸𝘰-𝘱𝘢𝘳𝘵 𝘴𝘦𝘳𝘪𝘦𝘴 𝘥𝘪𝘴𝘤𝘶𝘴𝘴𝘪𝘯𝘨 𝘪𝘥𝘦𝘢𝘴 𝘰𝘯 𝘱𝘳𝘪𝘤𝘪𝘯𝘨. 𝘚𝘦𝘦 𝘗𝘳𝘪𝘤𝘪𝘯𝘨 𝘐𝘯𝘯𝘰𝘷𝘢𝘵𝘪𝘰𝘯 𝘱𝘰𝘴𝘵 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘰𝘵𝘩𝘦𝘳 𝘱𝘢𝘳𝘵.
* In Greek mythology, Icarus and Daedalus attempt to escape from Crete with wings that Daedalus constructed from feathers and wax. Daedalus warns Icarus to not fly too low, lest the sea's dampness clog his wings, nor too high, lest the sun's heat melt the wax. But Icarus flies too close to the sun and he tumbles from the sky. https://en.wikipedia.org/wiki/Icarus
** According to a study conducted by Kenneth J. Wisniewski from the University of Chicago, when the price of margarine dropped from 71 cents at a local grocery chain to 69 cents, sales jumped by an astounding 222%! Two pennies are worth a lot. http://bit.ly/2OGoAcs
Photo by Fabio Brocceri who can be found here: https://www.facebook.com/fabiobrocceri.it