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Introduction to the

Company

Live Q&A Session with Mayank Kumar

Co-Founder, MD, UpGrad

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Agenda for the session

Introduction to Pricing1

Open Q&A4

Pricing Strategies2

Do’s and Don’ts 3

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Why is pricing important?

Pricing

Revenue

Market PositionServices

Provided

Buying Decision

Marketing and

Sales

Distribution

Channels

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Traditional economics for price determination

Demand Curve

$10

$50

$100

200 75 20 200 75 20

$50*75

$3750

$2000

$100*20$10*200

$2000

Revenue Curve

Choose Price which gives

Maximum Revenue!

Pricing is not MATH

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Introduction to Pricing1

Open Q&A4

Pricing Strategies2

Do’s and Don’ts 3

Pricing Strategies2

Introduction to Pricing1

Agenda for the session

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Cost Plus Pricing

Cost-Plus

• Simplest pricing technique

• Calculate cost of producing/delivering your product/service

• Apply % markup to earn target rate of return

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Value Based Pricing

1. Identify different types of customers and

understand behaviours separately:

• Lowest Priced Product Buyers

• Value Buyers

• Loyal Premium Buyers

Customer Segmentation

1. Do some methodical customer surveys

• Eg: Van Westendorp’s Price Sensitivity Meter:

• A direct approach for pricing research

• Assumption: Customers have some idea of

value of product

• For details refer to: Van Westendorp Technique

for Pricing Research

Insights into Customer Preferences Perceived Value of Product/Service

1. Perceived Value – The value that customers

think your product delivers

2. Increase perceived value through:

• Better marketing

• Give a value relative to another product

• Price Decoy

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Competitive Pricing

1. Charging a price that is comparable to what competitors are selling the same item for

2. There is little to distinguish among the products offered by competitors

3. Prices are generally set by market leader and other follow by matching these prices or offer at

comparable prices

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Comparison for Pricing Strategies

Pros

• Easy to

calculate

• Useful when info

on demand is

unavailable

Cons

• Does not take

demand into

account

• No way to

determine if

customers will

buy at set price

Cost Plus

Useful when selling tangible

products such as phones,

clothes etc.

Useful when selling services

Pros

• It is fairly simple

and requires

little research

• It is low risk and

can be fairly

accurate

Competitive Pricing

Cons

• It might lead to

large missed

opportunities

• It assumes that

competitors

have identified

the correct price

Useful for every business

Cons

• Competition

may lower

prices and

capture more

market share

• Less useful

when pricing for

budget

customers

Value Based

Pros

• Based on clear

understanding

of customers

and their needs

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Tips on Pricing – Use to validate your price points

Industry

Metrics

Benchmarking

• Gross Margin which is

Revenue – Service

Cost

• CAC and LTC. As

industry practice: LTV

~ 3*CAC

Break Even

Point

• Break even – point

when total revenues

equals total

expenditure

• Check whether price

point(s) make for a

feasible break-even

point

Sales and

Customer

Acquisition

• Run small marketing

campaigns

• Check how different

price points affect

acquisition

A/B Testing on

Price

• Don’t offer the same

product at different

prices

• Check for price

sensitivity – change

services or product

features and check

conversions

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Pricing Options for Startups

From Pricing Strategies to

Pricing Options

Pay Per Usage

Dynamic Pricing

Commission

Ads

Freemium

Subscription

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Introduction to Pricing1

Open Q&A4

Pricing Strategies2

Do’s and Don’ts 3

Pricing Strategies2

Introduction to Pricing1

Agenda for the session

Do’s and Don’ts3

Pricing Strategies2

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Do’s and Dont’s Pricing

1. Research optimal price

2. Pricing is a continuous process

3. Understand your customers

4. Use pricing tactics like discounts

5. Take cash flow into account

Do’s Don’ts

1. Set it and forget it

2. Cut prices drastically to sell more

3. Overestimate LTV

4. Underestimate cost structure

5. Give discounts that aren’t limited in time

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Agenda for the session

Introduction to Pricing1

Open Q&A3

Pricing Strategies3

Different ways of Pricing2

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Open Q&A

Write Your Queries in the Chat Window