When pricing a product, service or solution it is common for many to wrestle with how to determine what the actual price point should be. 

Common questions such as:

       (a) Should the price point end with .00, .95, .99 or display no decimal or cents? 

       (b) Should the price point be $30, $30.00 or just below at $29.95 or $29.99?

In this post, I don't answer those questions . . . but I do offer what curbed tonight's curiosity around what I'd find via a simple Google search.

Below displays my findings and while there is not a whole lot to derive from this, it does give me an idea of which price points are more common across the pages Google indexes.

Side note: Curiosity increased, so for one set of price points I added a comma after the dollar value and the word SOFTWARE to the search criteria (e.g. - "29.95", software).  I have included those results (with percentages).

4 Options to Improve Profits :

REDUCE

 - Fixed Costs

 - Variable Costs

INCREASE

 - Revenue / Sales

 - Prices

Many know this and yet few seem to grasp such a simple truth.  The reason I know this is primarily due to my comprehensive background, real world business experience in numerous business environments and being exposed to studies that reveal . . . of the 4 options above, pricing has the greatest pay-off potential.

The below table is from a McKinsey Study and more can be found in the book, The Price Advantage, by Michael Marn, Eric Roegner, and Craig Zawada.

Combining this insight with my interest in Government and Politics, I thoughtfully concluded this must also be the case for Governments and also for Citizens.  In the case of Governments, this is why there is a thresh hold that, once passed, inevitably creates economic realities where higher taxes (prices) are seen as the only means to recover before the hole is too deep.  Fiscal discipline and a proactive approach to a sustainable spending strategy is relevant for Governments, Businesses and Citizens.  It is not emotional it is simple math. 

To pull this thinking together I created the Economic Variable to Stakeholder Impact Assessment Matrix (EVSIA Matrix) to more easily explain and analyze relationships. It includes the four options above (variables) and the three stakeholders (Citizens, Businesses, Government).

Given that the Government is to be of the people, for the people and by the people . . . hopefully the EVSIA Matrix will make more clear the best solutions that will produce favorable economic conditions for all stakeholders and ultimately favoring Citizens above all stakeholders.

Disclaimer:  This is a work in progress.  I have thoughts on additions and modifications but wanted to put it out for others to provide advice, references and comments.  Please, if you are so compelled, contact me to offer your insight, input and comments.  Thanks.

So why does this matter?  Well, given the current events of our time and decisions our Government has made recently and are contemplating , the benefits of profitable economic performance are not limited to business . . . but also apply to a society's citizens and government.  Consider the below benefits with respect to each stakeholder; citizens, businesses and governments.

The Benefits of Profitable Economic Performance

1.  Ability to fund growth

2.  Ability to invest in capital improvements

3.  Ability to invest in research, development and innovation

4.  Pay down and eliminate debt

5.  Performance incentives and rewards to attract and retain key talent

6.  Acquisition opportunities

7.  Contribute to social causes

8.  Sustain market relevance and market value

9.  Rewards and incentives for shareholders

Below you will find examples or click here to download the Excel file.

Below is a draft for a Business Tax Increase:

Below is a draft for a Citizen Tax Decrease:

My interest and passion around pricing stems from my experience in all areas of a business.

In fact, I have been “this close” to taking the leap and developing my own solution, because I believe all of the available solutions are missing significant opportunities to really set themselves apart from and lead the field.

Below I offer three brief comments on a solution previously launched as NetBooks and recently rebranded and relaunched as WorkingPoint.  I went ahead and signed up for the free offering to give it a test drive.  So far, for what they are offering, I really like what they have done with their solution.  I think WorkingPoint has built a great foundation to position themselves to win a lot of paying customers. 

It will be interesting to see how aggressively WorkingPoint goes after the market with compelling and beneficial new features.  If they choose to go slow, I wonder if they'd consider offering a white label version so I can add the beneficial features that my first hand experience tells me would compel tens to hundreds of thousands (if not millions) of prospects to switch from what they are using today.

Here are three brief thoughts on their pricing page:

a) Even though they are an accounting package and cents do matter, they should lose the “.00” after their displayed prices.  Psychologically the extra digits can seem more expensive and complex.  On the flip-side, losing the “.00” can make the pricing seem less, simple and straightforward.

b) I think they should be more creative and add some enthusiasm around how they are naming the different offering options.  Sure, it seems irrelevant, but there is a real opportunity to differentiate your offerings, your brand and raise the interest level in the minds of prospects.  Just don't go overboard and get too "off the wall" . . . it should make sense to your target customers.

c) The “Coming Soon…” section is an excellent choice and many startups miss opportunities when they do not include a section that captures the direction the solution is going.  Doing so communicates value in the mind of prospects and says “we are continually innovating and improving the solution” and “we plan on being around longterm”.  I would like to see at least one more upcoming beneficial feature listed though, as two seems like too short of a list.  They could even include a last entry that says something like, “Even More On the Way . . . we listen to the recommendations of our customers, click here to see some of the amazing additional features we are working on” (they do include similar copy, but at very bottom of page currently).

Click for larger view, then expand window 

I’ll stop there for now, as there are a number of other elements I would be A/B testing.  I will update this post with some additional thoughts soon.

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The attached spreadsheet is simply to track how many of them even mention their revenue model . . . and not regarding the viability of their plans, at this time.

Click for larger view Demo Fall 2009 Companies.xlsx 

* You may also simply provide a comment to this post.  Thanks for your help.

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The number one reason your strategy is not capturing your full profit and market potential is that a strategy has not been formulated and does not actually exist.

The reality is a strategy must exist and include all the parts necessary to create, recognize and capitalize on opportunities to achieve your company's full potential for positive and profitable outcomes - everyday - every transaction.  Anything less is really easy and therefore really common.  Most companies don't achieve their full potential and thus standards of acceptability have eroded to the point where short-cuts and unethical or lazy decision making render "bursting bubbles", putting out "fires" and "financial crisis" that should not be surprising at all.

The details do matter.  Diving deep into the details of your strategy actually clarifies the steps that will get you where you want to go faster and not only gets all stakeholders on the same page, but on the portion of the page that is relevant to their role and optimizes their ability to contribute to success.

This does not require a lot of time.  It does require focus and follow through.  Unwillingness to prioritize time for strategy development creates an inability to answer the questions necessary to formulate a solid strategy and too often leads to decisions like "just going with what we have" and "we'll come back to that" for the sake of "time".  Strategy questions are tough questions because they require both some uncertain decisions and leadership that is willing to make those decisions.  Having clarity around your strategy provides clarity around what elements of the strategy are effective, working, not working or possibly missing.  It allows you to iterate faster and fine tune your competitive advantages.

Your business strategy clearly defines your objectives and how your company intends to generate positive and profitable results within the markets you serve. Your entire operations must align to that strategy and enable your employees to execute it daily. It is the strategy's communication and execution that determines whether your company can turn good intentions into targeted, profitable and sustainable outcomes. 

7 Reasons Why Your Strategy Is Not Capturing Your Full Profit Potential

    1.  A strategy has not been formulated and does not actually exist.

    2.  Lack of current and relevant information about your customers wants and needs.

    3.  Your strategy fails to recognize the limitations of your company.

    4.  Employees don't know how the strategy applies to their everyday work.

    5.  Your operating policies, processes and procedures do not support your strategy.

    6.  Performance metrics and rewards are not aligned with your strategy or market timing.

    7.  Lack of focus and follow-through disconnects you from your strategic objectives.

We will cover reasons 2 thru 7 in the days ahead . . . stay tuned . . . better yet stay focused on fine tuning and communicating a solid strategy.

This is a first look at a project I am working on named:

The Value Play Book

Simplified steps of clarity to quickly achieve sustainable market success.

I really look forward to sharing more soon, if you would like to receive updates or simply learn more, leave a comment and let me know.

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Lessons learned sometimes need to be re-learned . . . I will continue to iterate to optimize my presentation skills.

I hope you find the PowerPoint slides helpful as you consider if and how you will approach Freemium.  Take a look and read through the slides I did not cover, as well as the notes included for some of the slides.  Also, keep an eye on Pricing Observer as I post more actual examples of various approaches to pricing.

As I mentioned, there is much to consider and the duration of today's talk didn't allow for details around topics such as:

• Customer Insight
• Value Proposition Framework & Messaging
• Competitive Intelligence
• Pricing Research & Strategy (and all that goes into it and it affects)
• Choosing Actionable & Relevant Metrics
• Market Opportunity Assessment & Monitoring
• Linking Strategy to Execution (The Value Play Book)
• and much more

Thanks once again for attending and contributing to Seattle Tech Startups.

Some of you have already connected with me about meeting up for deeper discussions, for others I would be happy to sit down and discuss your opportunity, don't hesitate to contact me.

Slides:  PowerPoint    or    SlideShare

Now is a good time

Every year there are a given number of opportunities (customers) that want and need what your business has to offer.  No one knows this number in advance, but wouldn't you want your business to be in the best position to capitalize on your full potential to serve as many of those customers as possible - and do so profitably. 

Before another year of limited profitable opportunities pass your business by, contemplate the objectives of your business.  Consider the benefits that result from a 100% Proactive Approach to researching, improving and monitoring critical elements that are and will impact your business outcomes and targeted objectives. 

Proactive process improvement puts your employees and company in the best position to be competitive and profitable.

We will be breaking down, one by one, the "7 Reasons Why Your Strategy Is Not Capturing  Your Full Profit Potential" in the coming days.  However, right now, consider what opportunities may be about to expire and determine if you and your team can capitalize on these before they are gone.

Therefore posts will resume August 1st.  As is my nature, I am sure I will run into many post-worthy subjects along the way.  If they can't wait, I may just have to Tweet them.

For those of you who I am working with now or perhaps will be in the future, I look forward to connecting in the days ahead.  I wish you, your family and your business all the best in the meantime.

       I'll leave you with a thought to consider . . .

       Achieving your full market and profit potential demands your entire company
       clearly understands and consistently communicates your competitive advantage.