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krn

> People are also generally not that good at figuring out what they're willing to pay for something.

I like to think about it this way:

1) what is the highest price I could charge without looking like an idiot for charging too much?

2) what is the lowest price I could charge without looking like an idiot for charging too little?

Now I have a price interval.

If it's SaaS, I set the highest price for the shortest subscription period (ex., 1 month), and the lowest price for the longest subscription period (ex., 12 months), while adding additional options in-between (ex., 3 months, 6 months).

This way, I feel like both sides are getting a fair deal, and nobody loses.

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This sounds reasonable in isolation, but ignores the reality that the price you set is a big, blunt tool that determines who your users are. For some products, such as those that are challenging to start using but increase in value over time, your approach would filter out users who don't already believe in the longer-term potential of your solution. Is that a good or bad thing? Likely bad, but it depends on your product and the market it operates in.

If we distill this whole "pricing before product" idea down I think it's just a specific part of orienting to the needs and behaviors of users before designing the solution. Price is sometimes awkward to fit into something like user-centered design, perhaps because it affects users/needs, business viability, etc. but really it's one important factor among many. Maybe it's a very important, hard-to-change factor (likely true in luxury autos) but it can sometimes be a fairly insignificant or easy-to-change one (e.g. technology offerings with few substitutes).

> For some products, such as those that are challenging to start using but increase in value over time, your approach would filter out users who don't already believe in the longer-term potential of your solution.

This is a great point, and I have actually thought a lot about it. I came to a conclusion, that a great product should always be priced according to its the real value, whether users initially understand it or not. Those, who do, will eventually explain it to those, who don't. Apple is a perfect example: its hardware is more expensive, but it lasts longer and causes less friction to the end-user, even if the alternatives have similar specs on paper. The same could be said about the products by such companies as RAVPower[1], Minaal[2], and Montbell[3].

[1] https://www.ravpower.com/

[2] https://www.minaal.com/

[3] https://www.montbell.us/

How do you determine real value and how is your determination of real value the correct one?

Particularly in the context of the article, where the author is advocating for startups to set the real value of their products before launch.

I disagree with the Apple example in the sense that Apple typically launches products in burgeoning or semi-established markets. They have comparables to base their initial price range on and one of the world's strongest, high-end brands which typically targets the mid-higher end of the market.

Marketing and branding play a huge part of a product's success and ability to set prices. What is the real value of a good brand?

This is why it's tough for me to take the bulk of the article seriously. In theory everything mentioned is great. In practice, the world, customers, and startups typically don't yield enough information to do "Pricing before product" beyond anything more than a rough stab.

> How do you determine real value and how is your determination of real value the correct one?

I try to answer the question: "Is it worth this amount of money for what it does, if it does it perfectly well?". I don't care about marketing and branding, and focus only on the product itself. If the value seems to be too low, I try to improve the product, not the marketing.

I think Tinder does an extremely great job at pricing using age-based segmentation, because that's where the real value of the service defers to the users. It's not that people above 30 can just afford to pay more - they literally can't afford not pay, since they don't have as many options.

> I don't care about marketing and branding, and focus only on the product itself.

That's where I find your framework breaks down. You can't ignore marketing and branding. Apple, Tesla, countless companies would be nothing without strong marketing and branding.

A product is nothing if it doesn't reach consumers. A similar point was made upthread that pricing de facto segments your market. You can set the price to whatever you think is best. If you aren't reaching the right people or have trust issues with your brand, ex. a new, untrusted product, then no one will buy your product no matter how many features it has.

> You can't ignore marketing and branding.

Well, of course you can. Look at Craiglist[1]:

> In 2015, the AIM Group, which has calculated Craigslist revenue since 2007, estimated that the company pulled in sales of about $396 million. Its 2016 estimate of $694 million—an increase of 75% over the prior year—came down to the fact that Craigslist bumped job posting fees in certain cities and instituted them for the first time in others.

I am claiming, that marketing and branding should not determine the price of the product, not that it should not be used to communicate the real value of it.

[1] https://www.forbes.com/sites/ryanmac/2017/05/03/how-does-cra...

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