Product Pricing: Are You Killing The Golden Goose? - Blog 1 - Earn With Joomla Blog Series from Techjoomla

A singular story in the Aesop’s Fable series has always captured my imagination, right from my childhood days.

The story goes like -- a peasant had an enchanted goose with a magical ability to lay a single Golden Egg each day. One day the ignorant peasant overcome by greed, ripped open the belly of his goose to get hold of all the eggs at once in a single day. He did not gain anything but lost everything -- his goose was gone and so was the daily production of a golden egg.

Peasant with his Goose

In that vein I would like to ask you , "Are you KILLING THE GOLDEN GOOSE When Pricing your Products ?” You have to be very conscious when it comes to decide the pricing of your own, beloved, incredible and perfect product developed after a lot of hardship. It costs a million to you, but nil to customers until it's worth them.

How to put worth for consumers in your worthy Product ?

Your product is not just merely a compilation of only few hundred lines of codes. It is a lot more -- believe me, it is also an unique collection of:

1. Documentation on how to use it comes first.. then why you created it.

2. A promise of support when things go wrong at your user end.

3. Future roadmap of your product- The investors in your product need to make sure of where you plan to take it a year or so down the line.. 

If you are able to tap these basics, the world will start to believe in your work and your product.

The Sales of your product are completely dependent on your  Consumer’s Perception of your product.  Yes, you can mark my words. Lets look at a Quick example to illustrate this..  

“Suppose your product costs $500, but if a customer has seen a similar product somewhere that is costing $100 to him, then that $100 becomes the reference point (perception), and because of that , your product may fall in the front of the customer. This doesn't mean that you have to copy the reference point and act accordingly, you can mention the unique features of your product which makes your product shine brighter than others.” 

 The above three points I covered above will definitely help you in creating a value that will particularly boost your customer’s perception. As soon as your product's price become reasonable to the customer, it becomes a new perception for him and after that he will compare all other products with your perception.

Pricing Products Smartly:

Supermarkets make the best use of this concept. Many times a consumer is unable to make a ‘perception’ of his own or he is not able to create a reference point, then he searches for categories in products. That's the reason we categorize our products according to various features provided in order to compare them. 

Please allow me to explain myself through an example again- 

“Suppose there are 5 persons A, B, C, D, E and their maximum payable prices are $0, $0, $150, $400 and $600 respectively" Let me tabulate it for your ease.

Lets look at how your sales will do based on the above sample set of people.. 

Here, product price of $400 seems to be the best buy for customer and best revenue source for you. It shows signs to generates maximum revenue for you and also fulfills many customer’s requirements, it is more or like WIN-WIN business model in which both customers and you win !” 

The above example shows us what versioning and creating a proper signpost is all about. The process is just like a good salesman helping a consumer in taking an efficient decision while the consumer is thinking to buy a product or not.

Believe me, for any buyer this situation is a fix and if you are clear enough in helping him out then the buyer will be grateful to you and look out to buy from you next time. However to  make a fine point DO NOT BE A PUSHY SALESMAN ☺.  

Do's and Don'ts:

Like in everything, you have to take care you don't make foolish mistakes while pricing your products. 

DONT'S 

1. Don’t make a huge hike in your product pricing- Its very tempting to be able to gain huge profits in a single shot, but it’s a very dangerous to step inside a shoe with spikes of criticism, disbelieve, losing clients etc. There is no way you can justify an abnormal hike in price. Moreover, it is unethical and breach of trust if you do so without caring to give a proper explanation. In this case you can try using the versioning or sign post method I explained just above.
2. Don’t be a NERD- The currency of your business is your customers. At the end of the day check for how many customers were happy from your conduct and business practices. Allocate pricings depending upon activities that suits your clients. Don't drop your long-held clients, just consider at least once how long has the client been unprofitable for you.
3. Don't confuse Profit and Revenue- Revenue is the complete money you earned by providing services or any other sources. On the other hand, Profit is the money left with you after paying cost of business, payroll, taxes or interest on loans.

DO’S

1. Categorize your users- Anytime you service a consumer, there is associated cost. You can categorize your customers according to the product category they have purchased. This will prioritize the number and frequency of your service to them. 

2. Sell additional functionalities- People aren’t only interested in buying a product or service. They’re interested in the extra benefit that comes from buying your product. 

Let me give you an example of what we do at PayPlans. In the Joomla world lot of other companies sell too.We have created an apps eco system around Payplans that we as well as other companies contribute to. Today we have 110+ apps that work with PayPlans & extend it in amazing ways. 

3. Taste, Taste, Taste, Taste- Sorry, meant to say test, test, test, test (actually I am having yummy cheese pizza over here so...). Keep innovating and testing new changes Take the results as a sample, analyze them and then take actions accordingly (your action may include enjoying pizzas ☺). While testing, you can also request your faithful customers to participate and contribute in your business.

Well, pizzas really work for us. Do they work for you too? Awaiting your reply...

We always love to hear from your side. Your ideas and feedback are always most welcomed.

Signing off just for now,Take care, See you soon. Ciao!

Co Authored By:

Anjan is a Business Development Manager and Ankit is a Software Developer at Ready Bytes Software Labs.

Ready Bytes is behind Joomlaxi & Payplans a popular Subscriptions system for Joomla.