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Pricing Strategies for Products and Services

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40hz:
I can't say I have enough experience (in fact I'm extremely extremely inexperienced on this subject) but the list is incomplete at best and at worst it's cute but it's wrong.
-Paul Keith (December 22, 2012, 10:43 AM)
--- End quote ---

Interesting...

I've got about 30 years direct experience with this sort of thing and I've found most of what was suggested in the article to be quite valid.

As far as incomplete goes, there is not - nor will there likely ever be - a definitive final academically correct and complete business theory for anything. Because management (despite its desire to be scientific) is at least as much of an art as it is a science. And the environment within which most businesses operate is constantly changing.

Which is why it's important to take all business advice within the context in which it's given. To wit, a suggestion and "food for thought" rather than received wisdom.

Fortunately, most people who are running a business (or freelancing) already realize that. So the predictable disclaimers and cautionary notes can usually be safely dispensed with when management topics are presented to business owners. They already know what's been suggested is not intended to be swallowed whole and without question.

 8)

TaoPhoenix:

It also matters hugely in what context Pricing is being discussed. In the Web Services market it has been about 5-7 years of "start free, then sneak in monetization after everyone is hooked". That's not even the "try once" joke about drugs, that's "it's free for years until we decide to do X when you can't easily leave."

Paul Keith:
I can't debunk it but all I can say as a food for thought counter is that 30 years is not enough.

30 years ago, this idea of white was popular in marketing concepts. People love white teeth. People love white clothes. Flash forward today, the ad theory has changed but only for developed countries. The same white teeth is still being designed and revolved around in less well off countries and not for lack of sales reasons.

When I say incomplete, I mean it as a science and I don't mean it as a science.

As a science, the words incomplete mean "progressing". Not stuck. This sticks that's why it can stay for years and corrupt people.

Advises like put the word small in front of fees is the equivalent of saying put a facebook icon in  your webpage and we're done. I've just done your web design.

It doesn't come off that way because it's anchoring research studies to sleight of mind and weaken your own standards if it were a subject of your niche.

In short, even though I don't know if the author intended it to be that way, there's more to learn from how the author structured the article than what he wrote though both are minimal and leaky even given leeway for a blog article.

For example, solution selling has come and gone as an art, not an art, a tired old cliche, a model that still works for a lot of big companies. It's been there and done that and yet, even though it doesn't claim to be a science, it's still less of a dead-end than bringing up the rustiest and leakies and long term inhumane routes of corrupt selling 101 to it's reader.

Hate it, like it, find it it's all smokes and mirrors, It's still being replaced and it's being replaced by new food for thoughts that question the old way of thinking without debunking it. These advises don't even register as blatantly stupid and dangerous examples even though they've come and gone.

It's not always the question or what's been swallowed. The context issue is also a red herring. The author already said it was research studies. He threw the context down and ran away with it. It's his responsibility to elevate or deflate the common false interpretation and tired applications of those studies and raise the bar to something that actually counts as a suggestion or food for thought.

As an example,

He doesn't even address what would happen if everyone added the words 'small' in their fees.

Worse,

That's even older than the "start free then sneak in monetization" strategy!
That's even older than a 2 for 1 sales strategy!

It's not even old in a golden rule or food for thought way, it's not even strategy!

He took a research on dvds and twisted the context into a fee-based analogy and twisted it into what amounts to telling the customer it's cheap with no follow-up on how to execute or what font to put it in or....or...I could go right now into Facebook's unregistered page and his own mis-applied twist of an analogy would be worth something of actual value than his actual words and can anyone really say there's something oh so food for thought about staring at Facebook's sign-up page?

What's worse had he actually tried to form a legitimate article and combined his 7 Pricing Strategies, he would have found the obvious flaws of his statements if he had a small inkling of what those results' notability were about. Instead it's an article that hopes that by adding research studies and repeating the results, readers will forget the fact that everyone has tried adding adjectives into their sales before. I could get a better strategy from a fruit vendor without them even trying to give me 1 pricing strategy. I could be a kid with bad charisma and I could stumble on the strategy of making my services sound cheap.

And I think if this were really food for thought, we'd have moved on to the thought. Instead in order to have any thought in the discussion, the readers must go away from the food or put more weight into the packaging than the food's tastes. A real food for thought thugs as back into the subject. Even talking about Apple or Pricing Strategies or that Blog Article tugs us back into those terms. None of the examples tugs us back in as we're talking. We're all trying to avoid what the writer was actually saying and honing in on these keywords so that it could seem that the writer actually gave some thought to what he wrote and it wasn't just a regurgitated copy-paste of those research studies with some horrible and bad follow-ups that are so silly, describing what's wrong with it is as silly as describing what's right about it.

TaoPhoenix:
Totally off topic, but lemme just say laterally that Paul K. is in the top 25 list for consistently posts the longest replies I have ever seen on the web. That's one reason I hang here besides the software stuff.

40hz:
Paul you lost me once again. What I meant was I've been involved in pricing decisions (both as a business buyer and a seller) for over 30 years. I've run a few businesses. Started a couple. And served as CFO for three more. So most of what I "know" (or more correctly believe to be currently valid assumptions) is based on my own real world use and refinement. And since the environment and contexts of business keep changing, they're all subject to ongoing refinement, modification, adoption and dismissal. And FWIW, pricing strategies aren't always based on logical considerations since buying patterns seldom are. Especially when it comes to consumer purchases.

If some of that (e.g. "snob pricing" etc.) offends you, there's little to be done for it. Many people gladly pay more for something just to feel an affiliation with the image the product presents. That bugs me too. But if I were selling a product that depended on that for its success, you could be sure I'd take that into consideration - or find another business to be in if I couldn't.

I guess the best I can say in response to your previous comment is that this isn't an academic exercise for those of us who have to make pricing decisions. It's a day to day reality as well as a necessity. If that screws up something like a good intellectual discussion on the subject, so be it. It wasn't my intent to get into a long conversation about the topic of pricing. Or to act as an advocate for what the article's author was saying. It was only to share an article that, based my own personal experience, I felt was worth reading and thinking about if you were in business for yourself.

Hope that clarifies. :)

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