Startup Advice and Strategy: What’s important when considering your startup pricing model?

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An interesting and relevant question was asked by a user aq Quora forums . I think this is something every entrepreneur constantly thinks about  ..Have something to contribute, join the discussion here or at Quora at this link :

Startup Advice and Strategy: What’s important when considering your startup pricing model?

I would really look at the following at the minimum assuming you have found your target mkt likes your product based on your MVP.

1. User acq costs
2. Engg costs to develop
3. Life time value (how long you expect to retain them)
4. Anticipated Support costs to retain them
5. Current pricing of existing alternatives

Based on above, If you can come with a price tag where consumer perceives the value of your offering higher than the price tag you set, they will likely to buy. If the value they perceive is more or less same as your price tag , they might still buy depending on the pain level and how good existing alternatives are. If its less than perceived value, it will most likely will not result in any sale.
Also it really depends on who uses your product vs who buys your product. In some cases, if you are selling which is in high or premium range, people might want to check with their spouses or some level of social validation that its on to buy. The same might not apply if you sell to youngsters/teens/singles who earn decent salary or something which can be classified as lifestyle…

Pricing is really a psychological based decision and you have to do multiple experiments to figure what’s the better price tag. One last thing is dont go for short term pricing tricks as consumers will eventually realize the value and your brand recognition will  fall….

 

image courtesy: machiine.com

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