StartupTalky

Tag: pricing

  • Setting Your Product Price: 7 Useful Tips to Keep In Mind

    Price is what a customer pays in terms of money to acquire a product or avail a service. As an entrepreneur setting your product price can be a real task.

    Several factors are involved in deciding the price of a product. This is because Product pricing plays a very significant role in determining the position your product will acquire in the market.

    This becomes more significant in today’s scenario when the market is full of competitors. As a Start-up, the price of your product is capable of making or breaking the market for you. It is an essential element of financial modelling.

    High Price vs. Low Price

    You would have noticed that most products that are considered branded and thus, of great quality, are sold at quite higher prices. However, in contrast to other similar products available in the market are sold at lower prices.

    This scenario reflects the common belief system that states “when you pay for bananas, you buy monkeys”. Therefore, in an attempt to get the supreme quality products, they are willing to pay higher prices. However, this is not always true.

    Sometimes keeping the cost way too high can make your customers lose interest. This can be especially true in terms of startups where you still have to establish your product in the market by winning the trust of your customers.

    At this point, you might consider keeping the prices as low as possible for your customers, so at least they may give it a try once. Howbeit, if the price is too low even if it attracts a lot of customers it can have a negative impact on your profit margin.

    Sometimes, it is also seen that such tactics were used by the companies to create initial awareness about their product but as soon as the prices were hiked, the sales declined.

    Confused? Then how do you decide the price for your product?

    For any product to start and maintain a consistent market setting the right price is very important. It is capable of making or breaking the market for you.

    So, here we are with the 7 most useful tips that you must keep in mind while setting the price for your product.

    Keep reading…

    1. Include All the Variable Costs
    2. Indirect Fixed Costs and Break-Even Point
    3. Determine Your Profit
    4. Value-Based Pricing
    5. Scan Your Competitors
    6. Study the Market
    7. Update the Product Prices

    1. Include All the Variable Costs

    Variable costs include the actual expenses incurred right from the start of product manufacturing till the time it reaches a customer. It includes the cost of raw material, manufacturing cost, packaging & shipping charges, etc.

    The first cost considered is the cost of goods sold. This includes the cost of raw material and manufacturing per unit of product.

    After this, the time and labour costs, incurred in the production of a particular product, are counted. You can decide the cost of time on an hourly basis. This means you first decide the hourly income you expect from your business and then divide it by the number of products that can be manufactured in this duration.

    Finally, you add other variable expenses such as packaging & shipping cost, promotional material cost, and affiliate commissions. The sum total of all these variable costs is known as the total per-product cost.

    2. Indirect Fixed Costs and Break-Even Point

    Two other major factors that must not skip while deciding the price of your product are the indirect fixed costs and breakeven point.

    Indirect fixed costs include salaries of office staff, rent of office space, marketing and advertisement, depreciation cost, insurance, and other professional fees, etc.

    Basically, these are the expenses that you are bound to pay irrespective of your sales or production. Therefore, it is crucial that this cost is covered under the price of your product. However, how to break these costs in terms of the per-unit price of your product can be difficult. Understanding the breakeven point will help you in this regard.

    It refers to the level of production at which the total revenue becomes equal to the total expenses. The formula used to calculate the breakeven point is mentioned below:

    Break–Even point (Units)= Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)

    By calculating the breakeven point you will be able to determine the number of units of the product that you will have to sell to equalize the variable and fixed costs. This, in turn, will help you to make an informed decision while setting your price.

    3. Determine Your Profit

    The next step is to determine the extent of profit you wish to make. The profit margin should be enough to save you from regular market fluctuation.

    Profit margin is usually expressed as a percentage and is an indicator of the money you make out of your sales.

    You have to consider both fixed and variable costs while deciding your profit margin. Thorough market research will also give you an idea to set an acceptable price.

    The basic formula used for calculating the profit margin is given below:

    Gross Profit Margin = Gross Profit / Revenue x 100

    4. Value-Based Pricing

    The aim of any business is to earn a decent profit. This is known as cost-plus pricing. However, as a long-term goal for your company, you will also have to identify what your customer is ready to pay.

    This can be determined by how valuable your product is for your customers. The high-quality and other superior features associated with it as well as the capacity of customers to identify and appreciate those features is what makes your price look reasonable.

    You can also conduct small online or offline surveys to understand the psychology of your customers.

    “Pricing is all about customer value. Price is what you pay. Value is what you get.”- Warren Buffet

    5. Spy on Your Competitors

    It is always a good idea to keep an eye on your competitors. In terms of setting the price, it will help you understand the strategies they are using for the evaluation of the price of their product.

    The right price for your product can only be determined as per the market norms that are set by the already existing companies.

    For example, if your focus is to build a large market share for your product you may launch your product at a relatively low price than your competitors. This might help you gain customer trust for your future products and services.

    However, if you want your customers to feel like they are about avail of some novel and exclusive services that are not available anywhere else, setting a price towards the higher end can be a good decision. If everything goes well and your customers believe you, this might help you establish your product as a brand right at its initial stage.

    6. Study the Market

    You cannot just decide your profit margins with your own mind. Neither can you set your price to match or beat the price of your competitor? You will have to study the market to understand how the other brands are doing and what the customer requirement is. However, the foremost thing to do is to identify your target audience so you can survey the market keeping their needs in consideration.

    Surveying the market will also give you an idea about the other factors that may affect the price or sale of your product. These factors may include simple Geographical issues, legal concerns, etc.

    A major example of such factors is the extreme shift observed in the market during the COVID-19 times. As per a survey, owing to the lockdown restrictions the tour & travel industry collapsed badly. On the other hand, the technology industry observed an upsurge.

    7. Update the Product Prices

    The price at which you launch your product does not have to stick with it forever. There are a lot of regular ups and downs in the markets that will affect the variable and fixed costs associated with your product.

    Therefore, you will have to remain updated with the latest market trend and keep revising the price of your product accordingly.

    Other than the market trend, there can be other valid reasons for you to raise the price of your product. For example, when you decide to re-establish your company from a value-oriented service provider to a high-quality brand, you may apply a price hike. This is known as strategic change.

    Other reasons may include a competitor raising the price of their product. This usually means that the overall price of that industry or service in the market is going up. Hence, it becomes obvious for other similar companies to hike their product price in a similar range.

    Conclusion

    Considering all the challenges it may be difficult for you to set the correct price for your product. However, by following the tips mentioned above, you will be able to make an informed decision.

    The simple things like knowing your costs and surveying the market as well as competitors can be of great value.

    Hope we could resolve your problem. You can thank us later.

    FAQs

    What are the factors to consider when setting a price?

    Include all the variable costs, calculate indirect fixed costs and break-even points, determine your profit value-based pricing, spy on your competitors, study the market, and update the product prices.

    How do you set a price for a product?

    Use different pricing plans, spy on your competitors, include all your costs and keep flexible pricing.

    What is the selling price formula?

    The selling price formula is: Selling Price = Cost Price + Profit Margin.

  • Comprehensive Guide to Analyse Your Competitor’s Marketing Strategy

    When you decide to begin with your own startup, there are a few things that cannot be avoided. You must have heard that there is a lot of competition when you thought of starting up your own business in that field. This is the time you need to realize that, you need to build up a new skill to land your startup in success.

    One of the skills is Analysis of your competitor’s marketing strategy is a skill which is extremely useful for any sort of business you might have entered. On the other hand, analysis of your competitor’s marketing strategy is a crucial step which if once analyzed, brings you halfway to your success. You need to make sure that you look outside the window and analyze what others are doing and know their strengths and weaknesses. In this article, we will provide you with a guideline on how to analyse your competitor’s marketing strategy. So let’s get started.

    What Is Competitor’s Marketing Strategy Analysis?
    What All Does This Analysis Comprise?
    Benefits of Competitor’s Marketing Strategy Analysis
    What Is the Process of Analyzing Competitor’s Marketing Strategy?

    What Is Competitor’s Marketing Strategy Analysis?

    Competitive analysis in simple words refers to– a well-structured evaluation of your business environment that includes the competitor’s company, it’s offering, and most importantly its marketing strategy. It is the art of knowing how well the other players of that particular field are doing in the market. Most importantly look for the spaces they are creating for you to grab the opportunity to dive into and come up better than them by providing something more valuable.

    What All Does This Analysis Comprise?

    Competitor’s marketing strategy analysis involves qualitative and quantitative data that is very crucial. The goals and missions of an organization depend upon it. Most importantly, how will the goals be achieved, i.e., what will be the strategy to effectively and efficiently achieve those goals is also formulated in accordance with the data collected. It involves answers to various questions like-

    • What are the competitors good at?
    • Where do the competitors lack?
    • How to make sure that they don’t steal away your customers?

    Benefits of Competitor’s Marketing Strategy Analysis

    Analysis of competitor’s marketing strategy is a crucial step for all businesses big or small. It must be done cautiously. As, it deals in the collection of the most important data, upon which the organization’s strategies are based upon. If done appropriately, it gives out plenty of qualitative and quantitative data that will help your own crucial business decisions. Analysis of Competitor’s Marketing strategy is important in many ways.

    Identify Opportunities

    Why choose your brand? This question plays a significant role in separating you from your competitors. A good analysis of a competitor’s marketing strategy gives you an insight into what unique would customers find in you. So that, they choose you over your competitors.

    Competitor’s marketing strategy analysis creates a significant opportunity to identify gaps through analyzing data. Create a new product category to bridge the gap between what your competitors offer and what the customers need.

    Know Strengths and Weaknesses

    You have a great opportunity to find out, where do the competitors lack by analyzing the collected data. Improve your product by capitalizing on competitors’ weaknesses customers complain about. It helps you create your own Unique Selling Proposition. You must learn from their mistakes and make sure that you do not repeat them at any cost. The focus must be on consistent learning and improvement simultaneously. By this, you can easily come up with a distinguishing identity in the market.

    Position of Your Business in the Long-Run

    As your brand expands, the expectations of your customers from you also increase. This opens up an opportunity for you to position your business in the long run. When you create a distinguishing identity. Through competitor marketing strategy analysis, you get a chance to get to know all their weaknesses of them, which is an edge for you over your competitors. You need to overcome all their mistakes that will help you position your business in the long run by creating a faithful image in the mind of the customers.

    You get to know what is going on in the market. It, therefore, helps you to keep with the pace and follow contemporary methods. You must eliminate the usage of obsolete and traditional marketing strategies. It helps you uncover market segments that aren’t fully served by competitors. You need to focus on that and work upon the loopholes of the competitors.

    Motivation

    By analyzing what your competitors are doing, you get to know their position in the market. They set a benchmark that helps you measure your standards and take corrective action wherever required. The presence of competition in the market gives the inspiration to work consistently. It gives a thrust to keep on striving to do better.

    What Is the Process of Analyzing Competitor’s Marketing Strategy?

    This guide on analyzing competitor’s marketing strategy works well for startup founders, entrepreneurs, business owners, marketers, etc. Including certain tips on where to look for data that isn’t publicly available, this guide consists of a step by step process of how to go about analyzing your competitor’s marketing strategy-

    Identify Competitors of Your Industry

    The first and foremost step is to determine who your competitors are. You need to pick the right competitors who are pitching similar products or services targeting a similar category of customers. To simplify, divide your competitors into two categories: direct and indirect.

    Direct competitors are those, who offer a product or service similar to that of yours who works as a substitute for yours operating in your same geographic area. Whereas, Indirect Competitors are those who provide dissimilar products that can be used as an alternative to satisfy the needs of the customer. You need to realize that Direct Competitors are to be paid more focused.

    Wondering how to identify direct competition? Here are the steps to follow-

    • Analyze search engine results (SERPs) for similar product queries.
    • Have a look at the market share analysis.
    • Have a check on who is sourcing products from the same suppliers/wholesalers as per your plan.
    • Keep a note of brands that use your target buyers the most.

    Determine What They Offer

    Product or services offered is where the heart of any business lies. Therefore, it is the best place to start with. A deep analysis of the competitor’s complete product line or services offered must be done. Along with this, there must be an eye upon attractive benefits that they offer along with the product and service which tends to attract their customers.

    Analyze Their Tactics

    Existence in this competitive market is quite difficult. Certain tactics are used by market leaders to achieve heights. Therefore, the focus must lie on the following questions-

    · What does the sale procedure look like?
    · What are the channels of distribution used by them?
    · What are the tactics that earn them the most advantages?
    · What are their customer relationship management techniques?
    · What are the lucrative offers they offer to their customers?
    · How do they manage interpersonal relations?

    These are a few helpful pieces of information that give you an idea of the tactics that the competitors apply. By knowing this, you can get an idea about how to go about to form own strategies.

    Analyze Their Pricing Strategy

    Price is the most important element. It is the value that the customer pays for the product or service. Pricing must be done very carefully as it depends upon certain major factors. Due care must be taken upon how the competitors tackle those factors and price the offerings.

    Determine Their Marketing Strategy

    The productivity of businesses depends upon the marketing strategy that is used. There must be knowledge of marketing strategies being applied by other players in the market. With the advent of technology, most businesses use the internet for marketing. The online world opens up the doors to meet a vast audience. Observe the competitor’s website, the way of content marketing, social media marketing, etc.

    Use Spying Tools to Know Your Competitor’s Strategies

    Various online tools and methods are available online which help you be aware of your competitor’s strategies. Spying tools can be of great help for this. One of the popular spying tools is AdSpyder. It helps you spy on your competitor’s ad strategies on different platforms. The platforms include Facebook Google, Youtube, and Instagram, and also search engines like Yahoo and Bing.

    AdSpyder – Spying Tool

    Perform a SWOT Analysis

    SWOT Analysis is a great tool to envision how to get an edge over other businesses. SWOT stands for Strengths, weaknesses, opportunities, and threats. When you have an overview from all these perspectives, you are on the right path to success. The analysis must comprise of following areas which are not exhaustive-

    · Customer experience
    · Online marketing strategies
    · Pricing strategy
    · Content strategy
    · Promotion strategy

    Conclusion

    The main objective of this article is to pay attention to the opportunities that the competitors are missing. One must learn to take advantage of the competitor’s weaknesses through the strengths of own. The market is highly dynamic which demands routine running of the competitor’s marketing strategy analysis. Competitor’s analysis is a multi-facet process, which if well-executed can land you towards productivity.

    FAQs

    What is Competitor’s Marketing Strategy Analysis?

    It is the art of knowing how well the other players of that particular field are doing in the market.

    What is the importance of Competitor’s Marketing Strategy Analysis?

    Analysis of competitor’s marketing strategy is a crucial step for all businesses big or small. It is important in many ways.

    How to Position a business in the long run?

    Business need to overcome all their competitor’s mistakes that will help you position your business in the long run by creating a faithful image in the mind of the customers.

  • Things to Know Before Hiring a Lead Generation Agency

    A lead generation agency can have a significant impact on the success of your business. By generating leads, they can help you increase sales and revenue. In addition, a lead generation agency can also help you build relationships with potential customers and clients. You can contact these individuals and offer them your products or services by providing them with leads. By doing this, you can establish trust and credibility with potential customers and clients, which can ultimately lead to increased sales and revenue.

    Things to Know Before Hiring a Lead Generation Agency

    Reasons to Hire a Lead Generation Agency

    What are the Best Sources that Generate Leads To Your Agency?
    What are the Best Sources that Generate Leads To Your Agency?

    Things to Know Before Hiring a Lead Generation Agency

    There are a few things you should consider before hiring a lead generation agency. First, think about your budget and what you’re willing to spend on lead generation services. Next, consider what your lead generation goals are – do you want more website visitors, more newsletter signups, or more sales? Once you know what you want to achieve, you can start looking for an agency that specializes in that area. Finally, read reviews and case studies to learn more about the agency’s work and see if they’re a good fit for your business. With these things in mind, you’ll be able to find the right lead generation agency for your needs.

    The following are the points that need to be considered before hiring a lead generation agency:

    Define Your Lead Generation Goals

    Before hiring a lead generation agency, you need to define your lead generation goals first. What are you looking to achieve? Do you want to increase brand awareness, drive more traffic to your website, or generate more leads? Once you know what your goals are, you can start to look for an agency that can help you achieve them.

    Do Your Research

    Once you know what you’re looking for, it’s time to do your market research and find the right agency for you. There are a lot of lead generation agencies out there, so take your time to find one that’s a good fit for your business.

    Set a Budget

    Before you start working with a lead generation agency, you need to set a budget. How much are you willing to spend on lead generation? This will help you narrow down your options and find an agency that fits within your budget.

    Ask for Referrals

    If you know anyone who has worked with a lead generation agency before, you can ask them for referrals. This can be a great way to find an agency that you can trust your business’s marketing with.

    Sales Aladin - Lead Generation Company in India
    Sales Aladin – Lead Generation Company in India

    Check Out Their Portfolio

    When you’re looking at different lead generation agencies, make sure to check out their portfolios. This will give you an idea of the type of work they have done in the past and whether or not they are a good fit for your business.

    Read Online Reviews

    In addition to checking out an agency’s portfolio, make sure to read their online reviews. This can help you better understand the agency’s work through others’ points of view and experiences.

    How to Generate Leads from Your Podcast?
    Podcasts are one of the best ways to reach people. A Podcast is a great means to grow your business. Learn to generate leads from podcasts.
    StartupTalkyRevathy Nair

    Ask About Their Process

    When you’re considering working with a lead generation agency, ask about their process. How do they generate leads? What kind of methods do they use? This will help you determine if they are the right fit for your business.

    Inquire About Pricing

    Pricing is an important consideration when you’re hiring a lead generation agency. It is essential to understand their plans and pricing upfront to know what to expect.

    Get a Contract in Writing

    Before you start working with a lead generation agency, get a contract in writing. This will protect both you and the agency, and it will ensure that everyone is on the same page from the start.

    How to Build a Sales Pipeline? (6 Step Guide)
    Are all your marketing efforts lacking to generate leads? Take a look at this 6 step guide to build a sales pipeline and generate leads.
    StartupTalkyArbaz Sayed

    Reasons to Hire a Lead Generation Agency

    As your business grows, so does the complexity of your sales process. You can no longer rely on a single salesperson to generate all of your leads and close all of your deals. Instead, you need to build a team of specialists who can each play a role in generating and nurturing leads until they’re ready to buy.

    That’s where a lead generation agency comes in. A lead generation agency can help you build an effective lead generation system, from generating initial leads to qualifying and nurturing them until they’re ready to buy.

    Here are a few reasons why you need to hire a lead generation agency:

    • It has the expertise and experience to build an effective lead generation system.
    • It makes use of various categories for the organization of data to make it more relevant to the target market.
    • It knows how to work with special marketing tools and thus, better sales for your business.
    • It can help you measure and optimize your lead generation efforts.
    • It can help improve your business’s online visibility.

    Thus, a growing business demands a need to hire a lead generation agency as they have the expertise and experience to build an effective lead generation system that can help you generate leads on a large scale.

    Conclusion

    Before you hire a lead generation agency, ask them about their process and how they plan to generate leads for your business. Ask for case studies or references from previous clients to get an idea of the quality of leads the agency has generated in the past. And finally, make sure you have a clear understanding of what the agency will and will not do for you.

    FAQs

    What does a lead generation agency do?

    A lead generation agency combines the information of customers and businesses that it can sell to a particular business wishing to buy new leads.

    Is hiring a lead generation agency worth it?

    Yes, hiring a lead generation agency is worth it as the businesses with efficient lead generation practices have a 9.3% higher sales success rate.

    Which are some prominent lead generation companies in India?

    • Sales Aladin
    • TDCX
    • Invensis
    • B2B Associates
    • Flatworld Solutions

    What is the difference between lead generation and digital marketing?

    Lead generation simply means initiating customers’ interest in your products and services. On the other hand, digital marketing focuses on the entire journey of buyers.

  • Amazon Pricing Psychology- 6 Ways Amazon Gets You to Spend More?

    Amazon, the company that started as an online retailer for books back in 1994 is now the largest e-commerce company in the world. As of January 07, 2022, the company is worth $1648.78 billion.

    Today almost everyone depends on Amazon and with good reason. You can find almost everything you would ever need delivered right to your doorstep. So how did Amazon get where they are today?

    Most importantly they’ve managed to stay at the top of the e-commerce business even with the rise of new competitors. To understand this growth and stability shown by the company, we’ll have to take a look at their history and analyze their biggest techniques that help them stay at the top.

    About Amazon
    The Psychology Behind Amazon’s Pricing

    About Amazon

    Founder and former CEO of Amazon, Jeff Bezos financed Amazon with $10,000 of his own money to get the company up and going in 1994. Amazon at that time was completely operated by Bezos, his wife, and a small staff team working in his garage in Bellevue, Washington. Shortly after in 1997, Amazon went public with a $300 million valuation at $1.96 per share.

    Jeff Bezos working from his office in 1999
    Jeff Bezos working from his office in 1999

    Amazon later on in 1999, allowed third-party sellers to sell their products using their website. Since the company already had satisfactory growth in the online sphere, retailers started using the platform with the goals of expanding their public reach and economy. Just within 4 months of letting third-party companies sell, over 250,000 customers had bought goods from a variety of different companies through Amazon.

    Every year Amazon has been getting better, offering more services and a better customer experience than before. In 2005, Amazon introduced its customer loyalty program known as prime. Prime gave users that extra fast delivery and service speed that they needed for a small monthly fee.

    Prime also expanded on to provide media services such as prime movies, music and gaming. Customers were more than happy to pay the monthly subscription for what they would’ve otherwise missed. At least that’s how the consumer mentality boosted Amazon’s sales after it launched prime.

    The very next year the company went ahead with Amazon Web Services(AWS) to consider and profit from the various cloud computing needs of the world.

    Amazon has also been actively developing the Amazon Echo line of smart products along with their assistant Alexa. The company has been growing ever since. Every year new products get added to Amazon, which starts bringing in new customers for the company.

    SaaS Pricing Guide: How to Decide the Right Price for your SaaS Product
    Deciding the right price for your SaaS product is not easy, a lot of research goes into it. So, here’s a strategy to help you decide the right price for your SaaS product.
    StartupTalkyDamini Bhandary

    The Psychology Behind Amazon’s Pricing

    Amazon’s success isn’t just because of the risks they take or companies they endorse, rather it’s mostly due to some clever marketing techniques. Communicating a product’s nature and value to a customer is essential for a successful e-commerce store. Here we’ll go through some of the well-known pricing strategies used by Amazon to boost sales.

    1. Prestige Pricing

    Consumer stores and shopping centers often use charm pricing as a way to get more sales. It’s common to see the price of a product just a cent below its actual cost. Prices like $4.99 seem cheaper compared to $5 when the difference is almost negligible.

    Prestige Pricing
    Prestige Pricing

    Prestige pricing is the exact opposite of this methodology. While some people may find lower prices more attractive, others may doubt its value and authenticity due to its lower prices.

    Prestige pricing is where the price of a commodity is rounded off to the nearest rounded figure so the price seems ideal. The higher and rounded prices make a product seem more valuable than it actually is.

    Customers are more likely to buy a product that will provide them with more value for money. That’s exactly what gets companies like Amazon more sales using this pricing method.

    2. Price Anchoring

    If you’ve ever used Amazon you might have noticed how you ‘always’ seem to get a better deal. Simple comparative pricing makes consumers feel like they’re getting better offers when in reality it’s just a way to promote sales.

    Price anchoring is a popular way of getting more sales. Several e-commerce stores including Amazon make use of a simple strikethrough price which enhances the value of the actual price.

    Although price anchoring and price discounts are different, the technique has been effective in gaining sales as shown by e-commerce statistics. In the world of digital stores, a sale is equivalent to a customer’s click. Hence price anchoring makes good use of perception to increase sales.

    3. Amazon Prime

    In 2022, about 142.5 million of Amazon’s total users are members of its Prime program. Amazon Prime is a paid subscription-based customer loyalty program that Amazon offers. Since its introduction in 2005, the number of prime users has been increasing progressively.

    Amazon Prime Users Growth in the U.S.
    Amazon Prime Users Growth in the U.S.

    Having a prime membership makes a user eligible for certain perks from Amazon. For starters, customers with prime get faster deliveries, access to special sales earlier, and Amazon’s media and entertainment services such as Prime Video, Prime Music, and Prime Gaming.

    Paying about ₹179 monthly gets you all these benefits and it’s no doubt why people prefer to subscribe to prime. The feeling of getting a higher priority and more gains is what prompts people to stay as prime users. Amazon Prime video generated $3.6 billion in revenue sharing in 2020.

    4. Comparative\Decoy Pricing

    Comparative pricing is a technique used to boost the sales of one product using a decoy product with alternative pricing. Let’s say you have a product that you’re interested in. If two products of similar nature are being presented, one with better overall value than the other, the choice is rather obvious. Comparative pricing is where a product is intentionally made to look bad to promote the sales of another product.

    Decoy Pricing in effect
    Decoy Pricing in effect

    While the decoy product dips in sales, the targeted product gets more sales and that’s completely intentional. The goal here is to get the customers to choose the targeted product instead of the other.

    5. Price Framing

    Everyone in marketing knows that a good sales pitch means a positive impact on sales. Price framing is how a product’s price is presented to the customers. The visuals associated with price presentation and context matter because a customer often makes their decision at the last minute and what they see has to appeal to their mindset.

    Simply adding additional text such as ‘only for’, ‘best deal’, ‘20% OFF’ makes the customer feel like they’re getting a bargain. E-commerce companies gain much more sales due to their marketing campaigns which use this method as well.

    6. One Time Deals

    Adding a time limit to deals and offers speeds up the decision-making process for customers and also makes products seem more valuable. Amazon has been offering limited-time deals for a while now and it’s common to see flash sales during festive seasons. Often these one-time deals aren’t much different from what you can get a product for, considering you have the patience to wait a while.

    As far as most common products on an e-commerce platform are considered, the prices never really stay high for long. It’s only a matter of time before new products rise and the older prices dip. However, customers are tricked into thinking that the reduced prices are indeed a limited-time offer and hence Amazon make huge sales just by adding a timer with a lower price.

    How to do Break-Even Analysis? | Advantage | Disadvantage
    Break-even analysis is an important financial statistic in business. Know about break-even-analysis meaning, advantages and disadvantages.
    StartupTalkyRoshni Tamta

    Conclusion

    Amazon makes excellent use of modern-day technology and scientifically proven marketing techniques to always develop the perfect pricing to get sales going. It’s all about the customer mindset when it comes to e-commerce and that’s where the use of passively manipulative methods shines the most.

    Not all of it is ethical, but the majority of applied techniques are rather intuitive and that is what keeps Amazon’s sales up high during the roughest of times.

    FAQ

    How does Amazon use psychology?

    Decoy pricing, Price anchoring, Prestige pricing, and limited-time deals are some ways Amazon uses psychology to get you to buy more.

    Why do Amazon prices keep changing?

    Amazon keeps changing its prices according to trends and customer feedback.

    How does Amazon use psychology to get you to buy more?

    Amazon creates a sense of urgency by displaying the products left till it gets out of stock.

  • SaaS Pricing Guide: How to Decide the Right Price for your SaaS Product

    While doing a business, one of the most important things is to set a proper price for the product or service that you are selling. The pricing decides the future of your business and if it will reach the top and be successful.

    Now, in any kind of business you need to do a lot of research while deciding the price of the product or services. There are various factors that need to be taken into consideration during this crucial time.

    When we talk about the importance of technology in our life, the thing that has made the most impact has to be the Internet. Thanks to this, we are enjoying so many services in just a single touch of our fingers.

    Almost every business is on the internet and is providing services to its consumers through that. We live in a time, where we can now get applications over the internet. Instead of installing a software one, we can have the access to it through the internet and can also maintain it there. This service is called SaaS.

    Companies that are building SaaS products must set a correct price for them as their revenue depends on it. So, in this article, we will talk about how one should decide the right price of their SaaS product that will entice the audience and will also bring profits to the business. So, let’s get started.

    “The moment you make a mistake in pricing, you’re eating into your reputation or your profits.”

    -Katharine Paine

    Why Pricing is Important?
    What is SaaS Pricing?
    How To Price a SaaS Product?
    SaaS Pricing Models
    FAQ

    Why Pricing is Important?

    Pricing is important for two obvious reasons,

    • The first and foremost one is, giving value to the customers, when someone pays for a product or service; it means it is worthy enough to buy.
    • Another reason is that it helps the said company to step into the competitive market. If it has a good cost-to-value ratio, then naturally it makes it presence known as a competitor for other same businesses in the market

    What is SaaS Pricing?

    A SaaS pricing is nothing but a price model of software that one can get access to through the internet and can maintain it online instead of installing one into your device. The things that influence the price of the products are the marketing strategy, Target markets, and revenue objectives. A proper SaaS pricing model will lead to success for that business that deals with these products.

    How To Price a SaaS Product?

    As mentioned before the future of a company relies on its pricing strategy. Now, there are several strategies that can be applied while setting the perfect price for a SaaS product and those are:

    Cost-Based Pricing

    This strategy is very simple and easy to apply. You can count the cost of the product by just evaluating the amount that was used in the making and also providing the product to the consumers. It includes the development charge of the product, the salary of the employees and of course a little bit more amounts that will ensure profit from that product.

    Although there are some limitations revolving around this strategy like the earning will cover all the cost that was required during creating and providing the product. You can also fall behind your competitor as cost-based pricing doesn’t notice the price of the competitor’s product.

    Competitor Based Pricing

    This strategy involves setting the price of your product that matches your competitor’s standards. This model is very easy to find, as in the competitor’s website you get to observe the price of their SaaS products.

    When you are new in this business, it is not possible to know the entire amount that will be cost for providing this service. So, pricing the product same as the price of your competitors gives you a general idea that can generate you customers for your SaaS product. It also has a limitation, if you consider your competitor’s pricing, you might charge too little for your service, which is definitely not healthy for your business.

    Promotional-Based Pricing

    This strategy is about lowering the product’s price to attract more consumers and increase their demand quickly and it is just for a limited time. The time limit chosen for this offer can attract a good number of consumers towards the product, which may result in an increase in the demand for the SaaS product.

    This can be applied for only a short amount of time and it can also backfire because if the promotional-based pricing continues, the consumer might question the product’s value.

    Value-Based Pricing

    Establishing this strategy takes a good amount of time and require a lot of work. In this strategy, the price of the product completely depends on the consumers. The value of the products decides their fate and the audience’s opinion of the product’s worth matters the most here.

    Here, even if you decided to make the price higher, if the customer is willing to pay then your SaaS product is definitely a hit. On the other hand, this strategy’s biggest disadvantage is that the consumers that are divided in a group find the value of your product different; going for the same price of the product becomes difficult.

    Black Friday 2021 SaaS Deals [150+ SaaS Deals Collection]
    Finding the best black Friday 2021 deals? Here we have collection of Top black friday 2021 deals on SaaS tools to save your time and money this year.
    StartupTalkyShubham Kumar

    SaaS Pricing Models

    This section deals with the pricing models that can be used to charge the users of your SaaS products.

    Flat Rate Pricing

    This model is extremely simple, here the business offers only one price for a couple of features that are tagging along with the product. It is preferable because it is easier to sell and this single price is for everyone thus not making it complicated.

    Usage-Based Pricing

    In here, the pricing depends on the usage of the product by the customer, that is if you use the service more, then you have to pay more and if less, then your amount will decrease. This way the customers can find reliability in this as they are only paying for the amount of service that they have used. It is also called Pay As You Go Model.

    Per Feature Pricing

    The users have to pay here for every feature that they are going to use It is best for those company that wants every feature of their product to be used by the customers.

    Tiered Pricing

    This includes giving out different packages that have different features in them for the customers to use. Here, the customer chooses the package that is more compatible with them and pays for that only. It can increase your revenue if your customer after using one package decide to use another one so that they can attain other good features that come with that different package.

    Conclusion

    The products and services that SaaS businesses are providing to their customers, the must-have contain a proper price. The business needs to follow a correct pricing strategy that will help them in establishing the business in front of their customers, and then only it can survive in the competitive industry.

    FAQ

    What is the Full form SaaS?

    The full form of SaaS is Software As A Service.

    What is SaaS Invoice?

    It is an automated system where it helps in billing clients recurring basis.

    Which is The Best Way For Pricing A Product?

    Cost-based pricing is the best way to price your product.

  • Strategizing Your Pricing – An Overview

    The price of a product is in fact the exchange value that we assign for a particular product or a service. It is in fact the only element of marketing that has a direct impact on the income of the company. This is the main reason why our pricing strategies should be accurate and apt because otherwise, the consequences will be disastrous.

    The price of a product plays a very important role in the market of commodities and branded products. When we look at the marketing trends over the years we can observe that pricing strategies have taken up a central stage over product, promotion and packaging.

    Today all of them are significantly influenced by pricing strategies. This article discusses different types of pricing strategies that companies can adopt depending on the nature and vision of the firm.

    Economy Pricing
    Price Skimming
    Psychological Pricing
    Pricing Variations
    Product Line Pricing
    Penetration Pricing
    Demand Pricing
    Cost – Plus Pricing
    Premium Pricing
    FAQ

    Economy Pricing

    This pricing strategy revolves around the idea of keeping your price deliberately low. Here you will be bringing down the price of a product so that it will be chosen more by the customers.

    However, one thing that you need to be careful about when you go for economic pricing is to make sure that the position the product will have in the marketplace is already predetermined. It should not create a perception among the consumers that something is being compromised.

    Also, be aware that economic pricing can also lead to a situation where your competitors will also do the same and the consumers end up choosing the most convenient one which will leave you in a very disadvantaged situation in case there are better-established products than yours.

    Difference between Red Ocean Strategy and Blue Ocean Strategy Explained
    If you are planning to enter the market with your product, it is important to understand the difference between the Blue ocean & Red ocean strategy.
    StartupTalkyAlan Joseph

    Price Skimming

    Price Skimming is a very common strategy used by the pioneers in the market. This is because they have a great competitive advantage. Here, they raise the price of a product to avail maximum revenue in a short span of time.

    Since the customers perceive the value of the product due to the utility it offers and the lack of other options, these products will be sold even at high prices. And as other people and companies enter the market with better products and added features the price of the products as a whole is reduced.

    Here there is an immense advantage for the early bird companies because by the time the product’s prices start to reduce, the early one would have already made a significant profit.

    Psychological Pricing

    It is one of the most common pricing strategies that businesses use to pitch their prices. In this case, the emotional element of customers is tapped to get an ideal response from their side.

    They are more prevalent in the consumer market than the industrial market. It is governed by the practical understanding that a consumer is more likely to buy a product if it is priced at Rs. 99 than at Rs. 100.

    Another way in which psychological pricing is done by making inconspicuous changes in the product without changing the price. We had a popular chocolate company that kept reducing the thickness of the chocolate bar without increasing the price.

    Pricing Variations

    This is a strategy used by companies to price their products in a variety of ways – like early booking, group discounts, stand by prices etc. It is done based on the demand for a product during different times or situations. For example, we have the ticket prices of long route private buses arranged in this manner. This method is also known as off-peak pricing.

    Product Line Pricing

    In this method, goods and services are separated to fit into various cost categories. The goal is to reap maximum profit by appropriating the product to fit into all price ranges and to expand the consumer base.

    The products at each level are slightly different in their features and prices. Obviously, the product with the most features will be at the top of the pricing range.

    Such a strategy will also enable the customer to choose the product range that fits their needs. This is a very common strategy that we witness when it comes to data plans, antivirus plans, OTT subscriptions etc.

    Netflix Plans
    Netflix Plans

    Penetration Pricing

    It is a very strategic pricing technique where you keep the price of the product really low. It also ensures that competition is checked. Because, if you are entering the market with a very low price, it means that any company that is entering the market later will have to lower their prices further to sustain, which is definitely not a practical option for them.

    In a way, this strategy is a deterrent to competition. After a safe consumer base is established, the prices are slowly moved on to a higher end.

    Demand Pricing

    As the name says, demand pricing is based on the demand for the product. Here the consumer demand pertaining to a product, service or consumer is the major factor that determines its price. It is also known as dynamic pricing.

    The perceived value of a product or a service serves as a foundation for such a form of pricing. It is also subjected to change depending on various factors like weather, the season of festivals etc which has a direct effect on the demand.

    Cost – Plus Pricing

    Cost-plus pricing is one of the most logical ways of setting pricing as far as the cost involved is concerned. Here the price is determined based on the cost of raw materials as well as the cost of production. It is further added with overhead costs and profit margin. It is a definite way to gain profit because as long as your cost and sales are accurately calculated profit is assured.

    How to Do Market Research For Your Startup
    Before starting any business you should do the market research first. Check out this post to know how to do market research for Startup.
    StartupTalkyParnas Ghosh

    Premium Pricing

    It is one of the most valued pricing strategies by both customers and producers. Here the quality of the product takes the front seat. They use a higher price but ensure that the product delivered is of premium quality in itself. And building up value is a very important prerequisite of such a form of pricing.

    The product is marketed in such a way that it will equip the customer with a plethora of technical characteristics of the purchase to make them feel that the product is worth the money.

    In fact, pitching the product is equal to making a buying decision for the buyer so that it is easier for them to say yes. This is because customers tend to equate quality with higher pricing.

    The pricing strategies of companies like Apple and Jaguar are clearly based on this notion of premium.

    Conclusion

    Pricing strategies as mentioned in the beginning is very subjective. It depends on various factors like the nature of your company, your vision, the nature of competitors, the future of the industry in which the product belongs and so on. In some cases, you might have to blend into market requirements to not incur losses.

    However, the pricing strategies that consider the cost involved as the most important element of determining prices definitely gives you a sense of assurance. While different strategies have their own pros and cons each business should be able to narrow down to one or a mix of multiple pricing strategies for their own benefits.

    FAQ

    What factors go into pricing a product?

    Pricing your product usually involves considering certain factors, like pinpointing your target customer, tracking how much competitors are charging, and understanding the relationship between quality and price.

    What is the best pricing strategy?

    Competition-based pricing, Cost-plus pricing, Dynamic pricing, Penetration pricing, and Price skimming are some of the best pricing strategies used by businesses.

    How much profit should you make on a product?

    As a general rule of thumb, a 10% net profit margin is considered average.

  • Flowmailer – The Email Delivery Platform you can rely on!

    Flowmailer provides an email delivery platform, focusing on reliable and lightning-fast email delivery. The team believes that every email not making it to the inbox is a missed opportunity to interact with your customer. That’s why they focus on improving the clients’ email deliverability. In the future, they’d love for every legitimate sender to have 100% delivery to the inbox.

    Read this article to learn about Flowmailer, email API, email delivery, SMTP, services, growth, funding, business model, and challenges.

    Flowmailer – Company Highlights

    Startup Name Flowmailer
    Headquarter Rotterdam, The Netherlands
    Sector Email Marketing
    Founders Richard van Looijen
    Founded 2014
    Legal Name Flowmailer bv
    Website flowmailer.com

    Flowmailer – Target Market Size
    How was Flowmailer Started?
    Flowmailer – Product/Services
    Flowmailer – Name, Tagline, and Logo
    Flowmailer – Business Model and Revenue Model
    Flowmailer – Startup Launch
    Flowmailer – User Acquisition and Growth
    Flowmailer – Startup Challenges
    Flowmailer – Growth
    Flowmailer – Funding and Investors

    Flowmailer Dashboard
    Flowmailer Dashboard

    Flowmailer – Target Market Size

    Email deliverability should be important to every business, so the company do not have a specific target industry or definable market size. In the next five years, though, Flowmailer aims to dominate the Dutch SMTP market and to have set a foot on the global market.

    How was Flowmailer Started?

    Flowmailer emerged from an email marketing software called MailPlus (now Spotler). Customers kept calling for a dedicated, more reliable delivery platform for their transactional emails. That’s where Flowmailer originates from, so when their customers got acquainted with Flowmailer, they were very enthusiastic.

    Flowmailer – Product/Services

    Simply put, Flowmailer is an SMTP relay service. The basic function of the platform thus is to receive emails from source systems (webshops, CRM systems, CDPs) and deliver them to the recipient’s inbox. But many SMPT relay services struggle with their deliverability.

    Flowmailer working SMTP
    Flowmailer working SMTP

    Flowmailer stands out from the crowd because its main focus is to get emails delivered, meaning it provide all the tooling the customers need to increase their deliverability. Furthermore, the platform provides tons of features to upgrade transactional emails, like advanced templates and dynamic PDF attachments.

    Email deliverability can be a pain to most marketers/email developers out there. The name is based on the company’s goal to relieve this pain and make email deliverability feel like it’s all going automatically: the simplicity of ‘the flow’. The ‘wm’ in the logo is a flow symbol.

    Flowmailer Logo
    Flowmailer Logo

    Flowmailer – Business Model and Revenue Model

    Flowmailer works on a pricing business model. The pricing is based on the amount of emails sent/month – divided in two packages, Go! and Pro. Go! unlocks all Flowmailer features for an account, Pro is made for accounts with multiple domains and source systems, plus enables phone support.

    Price/Number of emails Flowmailer Go! Flowmailer Pro
    <25000/month €89 €249
    <50000/month €179 €329
    <75000/month €269 €429
    <150000/month €389 €549
    <250000/month €509 €669
    <500000/month €609 €769
    <1000000/month €729 €889
    1000000+/month Custom Custom

    Flowmailer – Startup Launch

    As mentioned, Flowmailer is a spin-off from MailPlus, starting with 0 users was never an issue. Though, growing from that point took a lot of time. In the beginning, they mostly worked with sales strategies and partner relationships. Since last year the team has started doing marketing, which helps them grow as well.

    Simplify the Employee Onboarding Process with these Tips
    Seldom do you come across a company that has an entirely optimized employeeonboarding process. However, most companies have understood the importance ofthis and are gradually putting onboarding processes in place. However, if youare a business and are yet to get started with efficient employee on…
    StartupTalkyShubham Kumar

    Flowmailer – User Acquisition and Growth

    From a marketing perspective, the team found that there is a lot of traffic on SMTP, DMARC, and alternatives to their competitors. They’ve started targeting this traffic with Google Ads and it works. They spend a few thousand euros on marketing on average/month.

    Flowmailer – Startup Challenges

    Starting with marketing, the product was challenging. As mentioned, the team was relying on mostly cold sales before, so marketing was new to them. As a result, the startup’s first marketing project kind of failed, but they learned from it, and now get to know the audience a little better every day.

    Flowmailer – Growth

    Flowmailer mainly focused on the Netherlands (EU) for the past years, but started helping some international clients since this year. Most customers are thus Dutch, like VodafoneZiggo, Eneco, DPD, but they also have brands like Asics in their portfolio.

    Here’s a BuildWith metric:

    Flowmailer Usage Statistics
    Flowmailer Usage Statistics

    Flowmailer – Funding and Investors

    Flowmailer has raised a total of €280K in funding over 2 rounds.

    Date Stage Amount Investors
    April 2017 Seed Round €100K –
    April 2017 Venture Round €180K CNBB Venture Partners

    Flowmailer – FAQs

    What is Flowmailer?

    Flowmailer provides an email delivery platform, focusing on reliable and lightning-fast email delivery.

    Who is the founder of Flowmailer?

    Richard van Looijen is the founder of Flowmailer.

    When was Flowmailer founded?

    2014

    Buy and Sell Online Assets With Flippa
    The days of retail stores have been on a decline, while online businesses andenterprises have risen exponentially in the previous years. This pandemic hasalso played its part in the rise of online marketplaces[https://startuptalky.com/online-shopping-tips-save-money/], whilst generating aneed fo…
    StartupTalkyAnsh Mehrey

  • How to Price Your SaaS Product?

    For many new products, price is a decision made shortly before launch. But pricing a software-as-a-service (SaaS) product presents unique challenges for product and marketing teams. Unlike traditional software, customers licensing SaaS products pay for your product on a recurring basis. This gives you more options for pricing models. The problem is, you have no idea how to price your SaaS Product. You are probably asking yourself:

    • “Should I be charging less than my competitor, or more?”
    • “Should I gate off specific features, or charge by a metric like number of users — or maybe both?”
      And the list of questions goes on…
    Pricing for SaaS Product
    Pricing for SaaS Product

    This article aims to help you find answers to all your pricing questions. “You must know your customers to know your pricing”. Gathering customer data helps you understand the general makeup of your customers and quantify the value people derive from your product, so you can drive your pricing strategy accordingly. Surveys are a very effective and relatively fast way to obtain information, but you need to be smart and intentional about the questions you ask.

    Standard survey templates include demographic data points such as age, gender, location, etc., but behavioral insights are more useful for pricing purposes. One of the most important things to consider when it comes to pricing strategy is what your different customers actually care about when they use your product. By realizing who wants what, you can understand which features all customers should have, and which features can be gated by tiers.

    Also read: New year Party Ideas for Office | Amazing Party Ideas
    Must read: How to Track Customer Acquisition in SaaS?

    Pricing Models for SaaS Products

    Different pricing strategies
    SaaS pricing models
    1. FLAT RATE PRICING: Flat rate pricing is probably the simplest way to sell a SaaS solution: you offer a single product, a single set of features, and a single price. This method is still used by eCommerce SaaS CartHook. A single monthly price of $300 (or $2,400 billed annually) grants access to all features of the company’s product.
    2. SAAS USAGE BASED PRICING: Also known as the Pay As You Go model, this type of pricing strategy directly relates the cost of a SaaS product to its usage: if you use more of the service, your bill goes up; use less, and your spend decreases. Usage based pricing works particularly well for recurring billing platforms like Chargify.
    3. SAAS TIERED PRICING MODEL: Tiered pricing allows companies to offer multiple “packages”, with different combinations of features offered at different price points. SaaS content marketing company HubSpot employ tiered pricing to great effect: each tier is designed around the needs (and budget) of a different type of potential customer, ranging from Basic to Pro to Enterprise.
    4. PER USER PRICING: A single user pays a fixed monthly price; add another user, and that price doubles; add a third user and, you guessed it, the monthly cost triples. Example of such pricing is road mapping SaaS ProductPlan. The only variable in their business plan is the number of users added to the account, and the per-use price is the same, whether you’re a single user or a team of 100.
    5. FREEMIUM BUSINESS MODEL: Thanks to high-profile success stories like Slack, Evernote and Dropbox, many SaaS companies use freemium pricing: offering a free-to-use product, supplemented by additional paid packages. Live chat SaaS, Drift use freemium pricing to great effect. Their “Free” package allows small companies to talk to their first 100 contacts for free: when demand for the service increases beyond that point (most likely correlating with company and revenue growth), it becomes necessary to upgrade to their paid packages.

    Also read: List of Pune Startups | Entrepreneurs & Startups in Pune
    Relevant read: Challenges Faced by SaaS startups

    SaaS PRICING STRATEGIES

    Your pricing model is at the heart of your SaaS business: it’s the foundation that allows you to build out repeatable sales processes and generate recurring revenue. But, within the framework of your pricing model, there are all-manner of different goals you’ll need to hit on the way to your over-arching objective of “growth“.
    That’s where SaaS pricing strategies come into play. Each of these strategies is suited to a different objective: whether that’s rapidly expanding into a new market, or attracting particularly high-value customers.

    Here are a few additional areas to consider when pricing SaaS products:

    • Your sales model influences your pricing.
    • Create upsell opportunities within your pricing model.
    • Use caution when offering annual pre-purchase discounts.
    • Build discounting options in enterprise licensing.
    • Consider free trials.
    • Service is key.
    • The demand curve is not linear.

    Also, a lot of companies offer a “free tier” which has limited features. The idea is that people will start using the product, get value out of the free tier but see a lot more value if they were to start paying and eventually upgrade. In theory this sounds great and for some companies it is. The problem with the free tier is that you may start running into problems such as the high cost of providing support to the free customers, the free tier bringing in the wrong type of customer, and requiring you to spend resources to try and convert the cheapest customers to actually pay you. Early-stage startups feel this pain the greatest since they can only afford spending resources on critical operations. Look at your buyer personas and product — sometimes the freemium model works well and sometimes it does not.

    Also read: 8 Ways to Toggle SaaS Customer Retention
    Must read: How to validate your SaaS idea before building an MVP?

    SaaS Pricing Strategy: The 10x Rule

    Applying the 10X rule to SaaS product pricing is simple. Just make sure that the value your solution delivers is at least 10x what you charge for it. If you can save a company $100,000 per month, you should probably initially think about charging them $10,000 per month. If you can save a company $10,000 per month, you should probably be charging them $1,000 per month.

    10x strategy
    10x Strategy

    Now, let’s see some companies with their pricing models.

    1. Upscope Co-browsing doubled revenue by doing per seat pricing only after making lots of mistakes.
    2. Drift made a free plan so they only charge those really using it.
    3. Hubstaff found their free plan ended up costing them money
    4. TribeHR took a data driven approach to pricing their product
    5. Aircall figured out pricing by calling their customers and talking
    6. Creately made a ‘Pay whatever you want plan’

    Conclusion

    Pricing your product is an ongoing process. You will never be done with your pricing strategy. As you get more data and feedback from your customers you will change your personas to be more accurate and change your pricing strategy to better target those people.

    Comment your views on the article and also let me know what is your pricing strategy in the comment section below.