#94/111: Don’t Just Roll the Dice

What is it about?

Pricing is highly critical and an in-depth topic. Can such a short book fulfill your needs? We will see. Neil Davidson is also famous for hosting Business of Software.

What can I learn?

Know your market segment: People work with relatives. If your competitor’s products cost between $10 and $20, you have a hard time sell yours for $2000. The first thing is to learn about your market segment. How high are competitor’s prices and why are they what they are. Learn about your customers. For example, software that cost less than $10 will be easily bought¬† by nearly anybody. If your software costs more than $50 some personal customers may get nervous. If you product costs more than $1000 your customer probably needs to talk to his superior. Even $1, $999 vs. $1000 can make a huge difference! Ideally, you should know about this by customer development.

Think about presentation:¬† Pricing is not just about setting a price. It’s also about product presentation, e.g. bundling. Do you sell other software? Which alternatives are there? Maybe you could sell with an complementary product? There are lots of different possibilities. Generally, selling just one product will produce a higher price.

Test, Test, Test: The most important thing, like expected, is testing your pricing. The best way to do so is by features. Take a look at software from 37signals or Microsoft. They got different product packages. For small and large businesses or personal users. You should avoid to charge different prices for the same product. This can really annoy users. One idea is that you sell your product for $x but display $x resp. $(x+y) as price. If enough users were willing to buy for $(x+y) you can increase your price and use this event as a nice marketing tool.

Conclusion

Firstly, you can read Don’t Just Roll the Dice for free! I liked the book, however it is just 80 pages or so. I think it got some nice ideas and is more to get a overview over the topic than really learning about it. You will find lots of articles on pricing on sites like Hacker News. In conclusion, great book for learning the basics but later you should look for other resources.

#75/111: Crossing The Chasm

What is it about?

After finding your product market fit, you want to conquer the world! However, often companies fail to, why? Geoffrey A. Moore explains why it’s hard to make the transition from early adopters to the early majority and how to fix it.

What can I learn?

What is the Chasm? On the cover you can see the Technology Adaption Life Cycle. There are innovators and early adopters left to the gap and early majority, late majority and laggards to the right of it. The gap is actually the chasm. The problem that you face if you try to market your product to more “conservative” people, i.e. the early majority.

Find a market segment: The first key step to cross the chasm is to look for an attractive market niche. In a niche people talk to each other which helps your marketing and establishes trust. People will recognize you early and help you to become a market leader in the first market segment.

Deliver the whole product: After choosing your niche, you have to think about what you need to deliver your product. People don’t want to be beta-testers, i.e. you have to deliver them the whole solution. If your product needs integration, you have to offer integrators. If you product needs instructions, you have to offer instructions. Your main goal is to become the best supplier in your chosen niche.

Become the market leader: After establishing your position in the niche, you can go into other areas and finally break into the mainstream market. It’s important to become the market leader or at least the third market leader. It’s important to be one of the bests, you don’t have to be one of the firsts. Moore estimates that you will need at least 25% of the market share to establish a long term position.

Conclusion

Crossing The Chasm is a bit wordy and could be written shorter. The examples are really helpful and make this concept easier to understand. I like it how Moore combined several methods (Technology Adaption Cycle, Whole Product, etc.) to create an instruction to how to cross the chasm. It’s a pretty nice book.