Product Pricing is a very sensitive area in Product management as it directly impacts on the way a product is positioned in market. It is necessary to answer a few basic questions before proceeding with this step.

1. iPOTT 16-Feb-12
Getting you there…
Starting with Product Pricing
Go Goal Product Pricing is a very sensitive area in Product
management as it directly impacts on the way a product is
positioned in market. It is necessary to answer a few basic
Set, Get, Go… questions before proceeding with this step. What technology
has been used? Is the product trendy enough? Is that software
To visit this blog Click here. compatible with most of the systems that are now being used
in Organizations? What expenses were incurred while
iPOTT being an end to end developing it? Based on these criteria, is this product premium
provider of innovative and cost or affordable?
effective services in the areas of
knowledge management, sales A few product companies believe in identifying a target
enablement and consulting offers market and developing a product to address their needs. A
a unique and unbiased platform few others believe in developing a product and then looking
for software product companies for potential buyers in market. The approach varies and this
worldwide to reach their target adds to the difference in the way product is priced.
markets
Further, many entrepreneurs carry a wrong notion that
anything that involves software development targeting a
www.ipott.com client is related to “Product development”. In order to
info@ipott.com appreciate the pricing methods, there is a need to
differentiate between Software Product and Service.
Assume a software company has a client who is looking at
automating a certain portion of Research and Development
unit to ensure that there is restricted access to services and
limited human intervention, then the software that is
developed is highly specialized and targeted at delivering a
specific need for specific client. This is a Service. It is not 100%
reproducible.
A Software Product on the other hand is something that can
be sold as a unit to ‘n’ number of customers in a
homogeneous market. To arrive at the characteristics of
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Getting you there…
potential buyer of course, market segmentation is required to
create homogeneous sets of buyers based on their buying
trends and need. The product can be tailored to suit the needs
Go Goal of individual homogeneous markets identified.
Set, Get, Go… For instance, Norton AntiVirus tool can be targeted at any user
who owns a PC or any Company or startup that owns
To visit this blog Click here. computers. Similarly, Finacle is a Banking Software from
Infosys targeting global banks. The idea is that Product is
We have blogs targeting a range of holistic, and Service is not necessarily holistic.
audience starting from potential
product innovators to CEOs Pricing methods adopted could be at the time of developing a
product or direct pricing, while creating special categories or
Audience interested in knowing indirect pricing, custom pricing and discount pricing targeting
about Marketing Strategy, Indian a particular group or members, etc.
IT trends and Best Practices to be
adopted while kick-starting A few software companies believe in price differentiation
company can utilize the where the same product or identical service is sold at different
information provided in these prices in different markets. In other words this creates price
blogs discrimination. This is used in Software-as-a-service model as
they charge more for those who use the software frequently.
Technology Trends The idea is that if software cannot be ‘resold’, then the
premium clients can be charged more than the other
CEO Speak customers who rarely use the software. Such an activity is
highly visible in Monopolistic and Oligopolistic markets.
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info@ipott.com
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