Tag Archives: pricing

What are signs that it is time to let go of a customer

(A repost of my answer on Quora )
Which segment is it? B2B or B2C .  Which industry and how far are they in the evaluation process or decision making process. How long they have been   evaluating. Does that customer already use another competitors product? If so what made them consider you in the first place ? Are they currently unhappy with the support, product features or core functionality of the product or did the existing vendor raise prices or is not giving them the expected discount?   …I assume you had done your due diligence in customer discovery process to ensure the customer you approached is really having the pain point and has committed to move into purchasing phase after evaluation…Did the customers requirement change after the evaluation process began? .I have been in account management roles for many yrs in B2B and lot of times what they say when they start evaluating a product  and their actual pain point are completely different. If I know the answers I could give you better answer.. 
But in general, the following are signs I would observe and will rethink before I decide to move on.
 
1. Are they demanding more features before they pay when you feel features vs price you already offer is already very good…
2. What kind of buyer are they..transactional or strategic/relationship ? 
3. Are they demands good enough but you dont have R&D resources to develop them?
4. Are they requesting multiple extensions of license of the product?
5. If they are existing customers, are they really support burden than what they paid for and there is no more room to negotiate either supporting model etc..
6. Customer is creating bad publicity in forums , word of mouth etc?
7. Customer is not commited either in terms of aligning their resources (persons, time,priority) etc..
8. Comparing apples-oranges
9. Is helping your competition by understanding your strengths better
 
The list can go on…I have encountered each of these and many other situations where I had to take a step back, take a hard look , see if this can be resolved by talking to them before moving on. Its very hard and sad that we had to let go a customer whether pre or post sales…So much energy goes into it, I would really urge to talk to them first before letting them go…B2C shares some similarities with each of the above…
Advertisements

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

Screen-Shot-2013-03-08-at-6.48.21-PM-580x326

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