You're Pricing It Wrong: Software Pricing Demystified
Advertisement Pricing your own product is always a tricky proposition, and the more critical the price is to your product’s success, the more difficult it is to set. It’s easy to look at another product and say how much you would be willing to pay for it, but how can you know how much people would be willing to pay for yours? There are no absolute truths or perfect formulas for finding the best price, assuming that the “best price” even exists. Instead, take a structured approach to finding a good starting point, and improve it through feedback and testing. But first, you need to understand what the best price actually is. Riding the Demand Curve When we price a product, our goal (assuming we’re running a business) is to maximize revenue. Economic theory suggests that as we raise the price, the number of sales will drop. The sweet point is where the intersection forms the largest rectangle. Once you’ve determined what your product is, you need to consider its value to your customers. 1.