

Ask HN: B2B Pricing - aspir

Hello, after reading through HN and viewing a recently submitted post regarding pricing for a user-focused, I had a question.<p>My startup is close to finalizing a business-to-business product and has some close connections within the industry that will result in likely first sales. However, we've been having trouble pricing the service. Every competitor on the market requires a request for a service quote, so price benchmarking is difficult. Also, getting this business to say what they're currently paying is unlikely.<p>Without getting too specific, we're developing an atmospheric science-based technology that is extremely disruptive. For example, the "error" reading for our product is nearly 10x less than current methods. However, it seems illogical to charge a price premium in suit.<p>As far as cost to provide the service, it is minimal. Should we charge on the hypothetical lower end of the spectrum for hopes of easy adoption, of charge a slight premium for quality? I have a monthly rate in my head that makes sense to me, but I have no idea if it is too high or too low.<p>On another note, this was a Ph.D. dissertation technology, and adjusting it for direct consumer use is not possible.
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Elite
There's no getting around understanding what the value of your technology to
your customers is.

The starting point is to find out the raw ROI. So if they use your technology,
how much money will they make or save? How does this compare to your
competitor? So I would say, you need to take the final step and translate that
10x reduction in error to dollars.

I don't care if my GPS is exact, but to an airline company this is critical
and they would spend well to make sure it takes into account the curvature of
earth, etc...

But the raw ROI is just the starting point. Companies also pay a lot of money
for other intangible features. There are some companies that spend millions on
Oracle when they could probably get by with free open-source. Clearly Oracle
is not competiting on price here, but on a feeling of 'security', knowing that
my site will not go down and if it does, I have someone to yell at and come
fix it.

If your product is truly revolutionary, maybe there are early adopter
advantages. Could early adopters of your product steal revenue from
competitors by using your tech? Price that in.

If your product is truly revolutionary, this final price may end up being
pretty high and give some customers pause. A good approach would be reduce the
price of your product for a pilot phase of say months. In return for reducing
your price, you can ask for some specific feedback or a testimonial. Make sure
they understand you aren't just reducing the price in return for nothing.

After they go through the pilot and have a real tangible sense of the value of
your product, they may be willing to pay your high price you initially
calculated.

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michael_dorfman
First, I'll recommend the same free e-book here that I recommended over there:
<http://www.neildavidson.com/dontjustrollthedice.html>

It will give you a good framework for figuring out your pricing.

If I were in your shoes, I'd be asking myself what the value to the customer
is. What's their ROI going to be?

Once you do get in the door with somebody, I suspect you'll hear what they
used to pay your competitors.

