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I'm in the phase of designing the price structure of my web application, and I'm trying to use a demand curve as a tool to find the "best" price.

A few questions pops up in my head:

  • How can this be a valid tool, when you just take a guess at the demand (quantity)?
  • Is there a neat trick to use the curve to pick several price points? (for Bronze, Silver and Gold plans)

I'm reading Don't Just Roll the Dice - is there any great blog posts, or other resources I shouldn't miss?

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1 Answer

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A demand curve is a great tool when you have valid data to help predict "potential" future outcomes but I believe that the old adage holds true in that one must communicate with their customers or potential customers to determine needs and then pricing based on those needs. There doesn't have to be much guess work at all if the right research is preformed.

Check out the top blogs recommended from this site: http://topblogs.onstartups.com/

I found that the http://www.forentrepreneurs.com/ pricing and sales machine structure to be very informative as well as some of the others on this list for general start up recommendations and advice.

Good luck, Tim - VA

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Thanks for the answer. Great resources. The numbers for demand, should that be the amount of units predicted to sell during the entire lifetime of the product? Or in a year? Or I guess you could do both... – MartinHN Dec 26 '11 at 19:18
You should have models to break down by year, quarter, month, week, day and then based on these predictions you should be able to correlate those numbers to your advertising strategies and compare that to revenue to help determine which campaigns geared towards what demographic worked best. – Tim Dec 26 '11 at 23:38

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