5 ms·

Hm. For truly niche software, I suppose I can see that, but for anything with more than even a few hundred customers, I don't think it'd last. Someone (like me,

by mikemol 16y ago

Hm. For truly niche software, I suppose I can see that, but for anything with more than even a few hundred customers, I don't think it'd last. Someone (like me, for example) would smell an opportunity and sell for less. I suppose it's not a bad thing for you in the short term, but I'd caution against getting comfortable on the profit cushion, and reinvest in revenue sources that can't be taken away by the same opportunistic competitor.

petervandijck 16y ago
Selling for less doesn't always work, because the more expensive guy can spend more on marketing. Also, for consumers, $19.99 is pretty much a fixed limit. Above that, you loose people, but below, you don't necessarily gain more signups.
- mikemol 16y ago
  I suppose that's true; below a certain point, the effect of a price is pretty inelastic.
wensing 16y ago
I can almost guarantee you wouldn't build an entire product/website/SaaS just because you 'smell an opportunity' in a market 'with more than even a few hundred customers', would you?
jacquesm 16y ago
I'm not sure how long 'it would last' would need to be for you to be convinced, but for me it has been going for about 6 years now since that conversation and it still works. The interesting bit is that I was just as skeptical as you are (and probably even more so) and in the end decided that trying it was the easiest way to see if it was true or not. The second time I was even more skeptical but then I figured 'in for a penny, in for a pound', just to be able to tell Richard that he was wrong the second time. But he wasn't. It doesn't hurt to try though, and if it does work for you then it's free money, which is nothing to sneeze at. Keep in mind that if your product costs you $2 to put out there per paying member and you manage to increase your sales price to $19.95 you've just gone from a 50% gross profit margin to 90%.
- mikemol 16y ago
  Understood, and I think I agree with you. I was thinking in terms of larger prices (i.e. $500 on up; I tend to work with custom and specialized software in my day job.).
GBKS 16y ago
How about pulling off what OXO did? They realized their products cut be copied and sold at a cheaper price. So they created their own competition. Just made a worse design, used cheaper materials, slapped on a new brand and put both lines on the same shelf. That way you can market to two demographics and cover the market. Extra bonus is that you can use essentially the same underlying tech.
- mikemol 16y ago
  Good point. I think Microsoft calls those SKUs. (They just didn't put the same brand name on it, I suppose.)
- tomjen3 16y ago
  That is useful, but it is actually just one example of price discrimination - and you might want to create more than one competitor to your product.
- pbhjpbhj 16y ago
  >How about pulling off what OXO did? Made gravy?
  - pbhjpbhj 16y ago
    OK, what did OXO do, they're a gravy brand in my country ...

by mikemol 16y ago

petervandijck 16y ago

Selling for less doesn't always work, because the more expensive guy can spend more on marketing. Also, for consumers, $19.99 is pretty much a fixed limit. Above that, you loose people, but below, you don't necessarily gain more signups.

mikemol 16y ago
I suppose that's true; below a certain point, the effect of a price is pretty inelastic.

wensing 16y ago

I can almost guarantee you wouldn't build an entire product/website/SaaS just because you 'smell an opportunity' in a market 'with more than even a few hundred customers', would you?

jacquesm 16y ago

I'm not sure how long 'it would last' would need to be for you to be convinced, but for me it has been going for about 6 years now since that conversation and it still works. The interesting bit is that I was just as skeptical as you are (and probably even more so) and in the end decided that trying it was the easiest way to see if it was true or not. The second time I was even more skeptical but then I figured 'in for a penny, in for a pound', just to be able to tell Richard that he was wrong the second time. But he wasn't. It doesn't hurt to try though, and if it does work for you then it's free money, which is nothing to sneeze at. Keep in mind that if your product costs you $2 to put out there per paying member and you manage to increase your sales price to $19.95 you've just gone from a 50% gross profit margin to 90%.

mikemol 16y ago
Understood, and I think I agree with you. I was thinking in terms of larger prices (i.e. $500 on up; I tend to work with custom and specialized software in my day job.).

GBKS 16y ago

How about pulling off what OXO did? They realized their products cut be copied and sold at a cheaper price. So they created their own competition. Just made a worse design, used cheaper materials, slapped on a new brand and put both lines on the same shelf. That way you can market to two demographics and cover the market. Extra bonus is that you can use essentially the same underlying tech.

mikemol 16y ago
Good point. I think Microsoft calls those SKUs. (They just didn't put the same brand name on it, I suppose.)
tomjen3 16y ago
That is useful, but it is actually just one example of price discrimination - and you might want to create more than one competitor to your product.
pbhjpbhj 16y ago
>How about pulling off what OXO did? Made gravy?
- pbhjpbhj 16y ago
  OK, what did OXO do, they're a gravy brand in my country ...