now all walks of life are facing the pressure of competition, how to occupy a space for one person in the fierce competition in the market, the price adjustment is one of the means. So for start-up companies, how to do a good price strategy? Look at the following analysis.
is this the right thinking process?
Madhavan Ramanujam is a pricing expert. He is the famous Simon Gu and management consulting partner, he said startups should choose the pricing strategy of only three: revenue maximization strategies, penetration pricing strategy and pricing strategy of liposuction (high pricing strategy). The focus of these three strategies are revenue growth, market share and profit maximization.
entrepreneurial firms’ revenue maximization strategy (revenue growth) – maximizing revenue growth in the short term. The willingness to pay for different customers is not particularly clear, the company should use the revenue maximization strategy, ideally, short-term prices and long-term price. The goal of many software companies in the middle market is to maximize revenue, and to sell the highest price in each sale.
start-up company penetration pricing strategy (market share) – lower product pricing, to win the absolute market share. This is a bottom-up pricing strategy. Lower prices can allow the market to accept the resistance to a minimum, and rapid growth, when the market has been widely accepted, and then transferred to the high-end market. Penetration pricing strategy will lead to enclosure – expansion of the sales strategy. Expensify, Netsuite, New Relic and Slack are used in this model. Penetration pricing strategy to market share in the first place.
startups liposuction pricing strategy (profit maximization) – the beginning of a high price, and then methodically to lower prices to lower consumer groups to sell more products. Liposuction pricing strategy is more common in the consumer hardware industry. Apple’s latest iPhone price is higher, and then recycling the old version of iPhone, sold to different users. Madhavan pointed out that Steve · Jobs is not only a product genius, but also a pricing genius. Because he can combine these two kinds of talent, Apple Corp quarterly sales profits will break the record.
liposuction pricing strategy is not common in the software industry, because some companies released products will be accepted by the most experienced users (it is those who are willing to pay the most profitable users). Of course, there are some exceptions, such as Oracle database, Tanium security products, Workday human resource management software.
how to do a good job pricing strategy, according to the public