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Pricing Isn’t Rocket Science --It Just Takes Some Work
and time
and teamwork
and judgment
and experience
and luck

233 Needham Street • Suite 300 • Newton, MA 02464 • (508) 647-0330
The Ethics of Garage-Sale Arbitrage
Is it ethical to buy something at a yard sale or flea market
at the seller’s asking price, if you know the value of the item to
be significantly higher than what is being asked because the
seller didn’t do their research?
Should you say anything to the seller?

The Ethicist, New York Times Magazine
The Ethics of Buying Software Licenses
Is it ethical to buy software from a software sales rep
at the seller’s asking price, if you know the value of the item to
be significantly higher than what is being asked because the
seller didn’t do their research?
Should you say anything to the seller now?
Wrong Price
Right Price

Pricing That Works
Pricing That Works
Market
Stage

Target
Customer

Offering

Your
Economics

Value
Delivered
Pricing Works Better When You …
• Look Beyond Price Level
• Focus on Right Customer
• Manage Perception of Value
• Have Good Processes
Level

Look Beyond Price Level

Customer
Perception
Process
Level

Focus on Right Customer

Customer
Perception
Process
Level
Customer

Manage Perception of Value

Perception
Process

Economic Drivers
Revenue

Cost

Other Considerations
Implementation

Timing

Risk
Manage Perception of Risk
+ € 1,000
€0

- € 1,000

€0

€0

€ 1,000

- € 500

+ € 500

Expected
Value = € 500

Expected
Value = € 500

Would you flip a coin?

Pain (Loss) > Pleasure (Gain)
Manage Perception of Value

• Loss aversion
• Anchor high

• Compromise
• Herd instinct
Manage Perception of Value

Technology  Value
“Technology means nothing unless it enables
a differentiated customer experience.
Nobody goes into a restaurant because it has
a mobile app.”
CEO Panera Bread
Level

Have Good Processes

Customer
Perception
Process
Have Good Processes

Bundles

Incentives

Deliverables
Amount

Metric

Incentives

Terms
Bundles

Deliverables

Terms

Deliverables

Metric

Packages

Amount
To-Do List
• Look Beyond Price Level
• Focus on Right Customer
• Manage Perception of Value
• Have Good Processes
To Help With Your To-Do List…
http://downloads.businessofsoftware.org/dontjustrollthedice.pdf
Thanks!
Jim Geisman
jimg@softwarepricing.com
+508 - 647 - 0330

233 Needham Street • Suite 300 • Newton, MA 02464 • (508) 647-0330

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Jim Geisman Pricing Isn’t Rocket Science - It Just Takes Some Work at Business of Software Conference 2013