MBA1099 How Many Pricing Options Should You Have For Your Product?

Let me tell you about Intuit QuickBooks. When I was starting out my business, I remember sitting at my desk late at night, not working on my business but cleaning up numbers, tracking and reconciling payments and wondering how this became my life. But once I automated the admin side of things, of my finances, those nights had disappeared and I felt a whole lot better. Outdo it with Intuit QuickBooks. QuickBooks is the trusted end to end solution that businesses rely on for getting paid, managing finances, paying employees, finding new customers and more. QuickBooks provides a team of AI agents and trusted experts. So doing it yourself no longer means doing it alone. Their payment agent gets you paid faster, their customer agent finds leads, follows up and secures more sales, and the accounting agent automates and categorizes transactions. Get your critical business jobs done with QuickBooks on the Intuit platform.

Ready to save on new tech? It's time for Dell Tech Day's annual sales event celebrating our customers with fantastic deals and benefits. Product perks include Dell rewards, free shipping, premium Support and more. PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals.

Hey oh. Welcome to the 100 RMBA Show. Because your business can always improve, that's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's lesson you will learn how many price options should you have for your product? This is a question a lot of entrepreneurs have when they start launching a new product. Should I have one price, two price, three five different packages, different levels, monthly plans, annual plans? What should you do? In today's lesson? We break it down. Everybody's business is different so your pricing should not be the same. You need to make sure your pricing or pricing packages fit your business and product that you provide. The choices, if there are choices, and we'll get into that in a bit are conducive for your customers. In today's episode, I'll explore all the options, including having one price, as well as how to introduce other prices or packages in the right way to your customers. They all don't have to be presented all at once. We got lots to cover, so let's get into it. Let's get down to business. Whatever product you're selling, you're gonna have to present the price of the product in some way, what are the options for the customer? What is best for the customer is what we're looking for here. But at the same time, what makes sense for your own business and the costs that are involved in delivering the product. So a lot of people say that when it comes to pricing, you should have some choice so people can compare or leverage pricing based on other plans. The common advice is, hey, if you have one price, that's the only price they see. But if you have two or three prices or packages, then they can compare and say, okay, I can see why the higher price package is priced that way because it includes more things. You can compare it to the lower price package that includes less, whether there are features or options or the way the product is delivered. This is why when Apple, when they release a new iPhone, they have many options. They have more than one option, two, often three options. So you can say, hey, I want the most expensive thing or, or no, I don't really need all that. I'll go with the middle of the road thing. And what often happens is that middle of the road phone, the one that is not too expensive and not the cheapest option, is the best selling option. Now the question is, would it be the best selling phone? Would you sell just as many units if it was the only option? Marketing experts say no. You have to have something to compare it to. Same thing when you shop for a car. If you buy a Honda Accord, there's three levels, right? There's the dx, the LX and the ex. The EX is the top of the line. It gives each level its value. It justifies each price. But here's a spanner in the works. There are a lot of products out there that have one price and it works. When does it work? Well, it works when the emphasis of the product is ease of use and simplifying things and just getting people through the door. A good example of this is Gmail. Gmail for business, for example, it's $5 a month. It includes a business email, Google Drive, storage, calendars, all the other things that go with the Google suite. It's just one option, $5, no tiers, no packages. Another great example of this is Basecamp, which is a project management tool that we use in our company. They only have one price for the product and includes everything. Their whole thing is ease of use. Simplify and just get people through the door. If you want to grow your product, grow your audience and get people through the door, just get started and try it. Then offering One price at the gate at the pricing page is going to simplify their choices. Nothing to think about. One easy low price. Now, even though Basecamp is $99 a month, it's not $5 like Google. It's still inexpensive compared to its competitors. Now, does that mean if I offer one price or two prices or three prices on my pricing page at the checkout page, is that the only options I can have? No, you can always offer them different packages later once they sign up. So for example, with Google and with Basecamp, when you sign up, it's a monthly option. But once you are a member and you're a monthly member, they will offer you a discount to upgrade to an annual option. So you can save 20% by upgrading your monthly account to an annual account. Now, there's a reason why they don't offer both at the time of sign up. Because again, they want to simplify. They don't want you to think about it. This is a cheap monthly plan. Go for it and you could do the same. Even if you do have tiers, even if you have three tiers, three packages, you can only offer a monthly option and then allow them to upgrade to annual once they're in their account. Or you can have an annual option and a monthly option, offer some sort of add on later on. You don't have to put the add ons at the checkout process. This may be more confusing for them. This may deter them from checking out. This may feel a little bit, you know, too rich for their blood, right? Like maybe I don't want to spend that much right now. Stops them from becoming a member from signing up to your product. Now let's talk about when you should have tiers, when you should have packages. Well, first of all, you have to have this if cost is involved in each package. For example, if you are running a software like an email marketing software, it's going to cost you more money to deliver a certain amount of emails every month. This is just cost on you in terms of server costs or database costs of saving a certain number of contacts. So you're going to need to tier your options based on your cost. The more money it's going to cost you to deliver that package. To deliver that product, you need to charge more. And you can justify by showing what's included in each package and say, hey, you get more contacts or more emails as you move up in the packages. We do this at webinar Ninja. If you want to check out our pricing page, webinar ninja.com our major differentiator between the packages that we offer is the limit of live attendees on a live webinar. Our lowest plan is a starter plan. It's a hundred live attendees, and we have four plans. And the fourth plan goes up to 1,000 live attendees. Now, the reason why we differentiate is because it costs us a lot more money to deliver a webinar with a thousand live attendees. That video broadcast technology that we use, there's a lot of load and bandwidth on the servers when that happens. So in order for us to make sure we accommodate for a webinar of that size, we have to use more servers, and therefore, we need to charge more. And the best thing to do in this situation is just to be transparent and tell them why they're paying more. And it makes total sense. And you can even add this in your FAQs. The one thing I want to note is that you have to include in every plan what it takes to be successful with your product. You want to make sure that your users, that your customers actually win with your product. They have success, they get a return on investment. That way they can continue to be a buyer of your product. So you gotta include anything that is needed to be successful. So, for example, in our example with Webinar Ninja, all the great options that they need to run successful webinars, whether it's the marketing, whether it's running the webinars efficiently, whether it's uploading your slides, whether it's all the emails that go out for them, all that stuff is included in any package to make sure that no matter how many attendees they have on a live webinar, they can win. They can be successful no matter what package they choose. What you really ideally want to do is that they move up on the packages based on how successful they're becoming with your product. So the more success they have, the more they're going to need to invest in your product. And that makes total sense. I love this concept because, hey, you only are charged when you win. You only need to upgrade when it means you're going to get more benefit. Some companies price their products based on this. A company like Bare Metrics, BareMetrics actually charges based on how much money a company's making. So if your monthly recurring revenue is a certain amount of money, they'll charge you a package more than the higher package. If it's more than that, then it's the higher package. You can check out their pricing page to get the exact figures. But the point is, you're only going to pay based on your level. This allows you to feel like, hey, you can afford. It allows the customer to feel, hey, I'm getting charged based on what I can afford, where I'm at with my business. I like that.

Does it feel like it's getting really hard to figure out the best way to save for retirement? Fidelity can help you find clarity so you can save the best way for you. With a free personalized plan, goal tracking and timely insights, you'll be set to take on retirement your way. Get started@fidelity.com future expenses charged by your investments and other costs and fees associated with trading or transacting in your account. Apply Fidelity brokerage Services member NYSE SIPC looking for a Valentine's gift she'll truly love? 1-800-flowers.com knows what she wants for 50 years, 1-800-flowers has helped guys like you get it right. Delivering millions of fresh Valentine's roses nationwide. 1-800-Flowers offers premium fresh cut flowers backed by their seven day freshness guarantee plus same day delivery when you need them on time. Valentine's is coming up and bouquets are selling fast so so don't wait on this order today at 1-800-flowers.com sxm. That's 1-800-flowers. Com sxm.

If you're just starting out, you don't have to start with a whole bunch of packages. You can have one or two or three and then add on some later. Again you can add on the post sale add ons later. So once they become customers, you can encourage them to upgrade to annual or add an add on package. These things can be added once you launch. Just get started. Of course you can test things out. You can see how many of each plan plan do customers choose. So say for example you launch with three plans and you notice that most people are in the starter plan but close second is your second tier plan and then the lease is the highest plan. But let's take a look at revenue. Which plan makes the most money? Well, even though you had more customers with the first plan, the lowest plan, you make more money in total with your middle plan. So you really want to encourage people to buy that middle plan. It's where you're making the most money and it's probably the plan with the even amount of options to give them the most bang for their buck. Testing is so important. You have to test. You have to see what works. But you have to start with something so you can test something when you test the performance of the pricing packages. Well there you have it guys. Thank you so much for listening to the $100 MBA show. Before I go, I want to leave you with this. I emphasize testing when it comes to picking out your pricing packages, offering a number of packages or one package. But the point is you have to start and test. I wasn't a believer of testing for a very long time, and then finally I said, hey, everybody's a B testing. Everybody's testing things out. Data is really what drives business. I got to start really thinking about it when I realized is that I was avoiding it because I was a bit scared. I didn't understand it so well. So when I kind of took the time to understand that the importance of split testing and trying things out, I realized, wow, you can save a lot of money and make a lot of money when you have data behind your decisions. So test, test, test. All right, I'll check you in tomorrow's episode Q and A Wednesday where we answer your questions right here on the show. I'll check you then. Take care.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.