I had a great conversation with a serial entrepreneur this afternoon about how to price online services. We were talking about the different price points that companies can set for their products.
High Price Points:
Priced too high and you may simply price your product out of the market.
Low Price Points:
Is there an issue with too low of a price point? From a consumer perspective is there a hassle barrier to purchasing? Is it worth it to a consumer to spend their time going through the process of paying $0.01? Is this true for $1.00 or even $10.00? Especially if the purchase process is involved. I am not talking about itunes one-click action.
At this price point, shouldn’t it just be free?
About nathan kaiser
I think you should always set a high price like MSRP for cars. While you can apply discounts as a promotion. Most important is set a price for your financial projection inside your business plan so investors can see potential revenue under Best, Most Likely and Worst case scenarios.
“Free” is cool but you’ve got to make revenue somewhere, unless you have huge potentials for payment somewhere like clicks, it is hard to keep growing if you simply give it away. I always wonder how consumer value your service when it’s free?
Ian