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Setting Prices

fusioninteractivefusioninteractive subscriber Posts: 2
edited November 2007 in Business Planning
How do you go about determining realistic prices for a product or service when what you have to offer is pretty different from what everyone else is offering?  I am finishing up on my website content management system which I plan on targeting to startups/small businesses.  There are free CMS packages out there like Joomla, Plone and others but they are very complicated to set up and require a business to pay a developer to do almost anything with them.  There are others such as Ektron which target huge companies and cost tens of thousands of dollars and are major over kill for a small business.  Mine is different it that I plan on offering it at a reduced up front cost and then a monthly fee which will take care of the hosting and domain name as well as having continual feature enhancements to the site while allowing the business owner to easily keep their content fresh and add content themselves without having to pay myself or another developer to do it (which is the purpose of a CMS).  I don`t want to charge to much that I turn potential customers off but I also want to be able to make a living off of this and eventually quit my day job (as most of us on here aspire to do).  Thus I through out this question to you the experts.  How would you go about setting price or if you are a small business what would you be willing to pay for a service like this?
fusioninteractive2007-10-30 11:31:8
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Comments

  • CookieMonsterCookieMonster subscriber Posts: 0
    There is a book called The Strategy & Tactics of Pricing. You should buy it or pick up a copy from your local library. This book is rather weighty but it is worth its weight in gold.
    Some concepts from the book.

    Use price to proactively manage customer expectations.
    "Cost plus" pricing is obsolete.
    "Price-based costing" is the modern approach.
    Cost is not the same as price.
     
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  • robertjrobertj subscriber Posts: 0 Member
    Cost plus pricing has been used for a long time because (IMHO) it is easy. As a tech marketeer of 30 years, I can also say it is usually suicidal.
    Pricing is part science and part art with a lot of effort mixed in.
    I tell my clients to begin with "How much is your prospect paying to solve the problem now"?
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  • fusioninteractivefusioninteractive subscriber Posts: 2
    Thanks for the responses but do you have some resources to help explain these?  Cost plus pricing?  Price based costing?  HUH?  I`m a Web Developer but not an MBA.  These terms are new to me and don`t make a whole lot of sense.  I`ll look into the book CookieMonster suggested.  Thanks.
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  • angolaangola subscriber Posts: 2
    You`re overlooking the simple: do a survey. You aren`t in a completely new market so you have an existing base of potential customers. Find a way to reach those customers via a survey and ask them what they`d expect to pay.As an added bonus, invite the partakers of the survey to participate in a free "private beta". Don`t take the survey as just a way to collect data; use it to brand and prospect as well.Hope this helps -
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  • angolaangola subscriber Posts: 2
    WTH, "DoctorBiz"? You`ve posted that same message in how many threads today?
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