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We will soon be meeting for the first time with several of our potential customers which are chain-stores to which we will be selling our service.

I don't want to uncover too much information about the nature of our service, but I can say that it offers special advertisement abilities to chain-stores.

Our problem is that we're having a hard time figuring out what's the right pricing model, and how much should we actually charge.

We were thinking about a subscription plan with a fixed price per month. But we just can't put our finger on any figures.

Since we don't have many expenses and what we want the most is first of all to gain every customer, we were thinking about giving it for free for the first few months, and then figuring along the way how much we should charge. The problem is that we were told by various people that offering this kind of service for free will not look good and would actually deter potential customers from us. So unthinkably we should actually charge our customers in order to gain them, and at most offer the first month for free as a trial period.

It may be easier then to measure how much should we charge because then for the first time we could actually see how much traction the our customers receive from their advertisements.

So again we're back to square one where we should once again figure out how much we need to charge.

Our company is still only combined of our own - 3 founders and we don't really have many expenses yet, but once we will get our customers we plan to expand pretty quickly.

What do you guys think?

  1. Should we come with a well thought pricing plan before we meet with our customers?
  2. Is really offering the service for free a repellent for customers?
  3. If we offer a plan? How flexible could we be with it once time passes on?
  4. Some of our customers are big chain-stores and some are smaller with different sizes of resources available, Should I put it into my equation?

I know this is complex problem and I hope I made this question clear enough and not too tiring. I'm not expecting a full solution, but any advice can be very helpful because we are a bit clueless in this field.

Thanks!

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How about you ask your potential customers what sounds reasonable? I dont think we have enough information about your idea to come up with prices. I also dont think anyone wants to copy your idea here. – BhargavPatel Dec 25 '12 at 2:09
Hey BhargavPatel, Thanks for the comment. I'm not expecting any specific pricing suggestions, but more of some guiding. I've specified a number of more specific question which I believe are answerable considering the amount of information I provided. Also, asking the customers about a price is a possible option, although I'm afraid it may also look bad. Every marketing adviser would tell you that when your come to the meeting you should "Enter like a star and exist like a star", so if we sell an awesome product but don't know to put a price tag on it, it might damage our facade. – Orchestrator Dec 25 '12 at 6:50
Sorry, I tried to answer all of your questions. Hope I was of some help. Best of luck, happy holidays. – BhargavPatel Dec 25 '12 at 18:33

1 Answer

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No, it makes more sense to have them give you advice on how much they think is reasonable. Ask them which hypothetical price plan makes more sense to them, which seems fair, and if they have any alternative price plans.

Should we come with a well thought pricing plan before we meet with our customers?

No. You should however, think of general price plans. Whether you are going to charge monthly or for a certain amount of products? Since you are doing something very similar to my business venture, I will share my business model.

Since we are advertising a number of products, we will charge a monthly fee based on the amount of products a retailer wants to be listed. Example: $10/mo for listing of 100 products. $100/mo for a listing of 1000 and so forth. This will even out the playing field. You, nor your customers will feel like you are being unfair. Minor retailers will have a chance to use your service but so will major retailers.

Is really offering the service for free a repellent for customers?

No. However, if you plan on charging for the same service later in the future, I personally believe you should let your customers know in advance (eg: Since we want your feedback, your first year is on us!)

Edit: I personally also believe that you should not have a freemium. Have your customers pay you this way, they feel as if they have invested in something and they will want it to suit their needs better. This will help you get future feature(s) idea(s).

If we offer a plan? How flexible could we be with it once time passes on?

You can be as flexible as you want! However, you do not want to give too many options. Aim for 4-6 price plans maximum. I personally would hover around 4 maximum but in retail business things get a little hairy like I said in #1.

Some of our customers are big chain-stores and some are smaller with different sizes of resources available, Should I put it into my equation?

Definitely, when I spoke with Andrew Warner about my business idea, that was his first question. He said most likely larger retailers will not care about the services we would offer at first and that I should go for the lower hanging fruits. Which makes sense, most small retailers envy larger retail stores like Walmart. Also, larger retail stores tend to be franchises which is MY, and probably your, main problem as you do not have to convince the store manager/owner but the franchise itself. Refer to #1.

I tried to answer all questions in #1 altogether but still wanted to add a bit more for each question. I hope that helps. Please wait one more day for more answers and accept the best answer so that no one sees this question in the "unanswered" list and actual unanswered questions do not get lost.

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