The event was kicked off by Arvind Jha starting out with a round of introductions. It was quickly realised that the community was well represented and people coming from Noida, Gurgaon and Delhi was heart warming to see. Arvind then went on to describe how diversity is important when you are running a business. Different regions, different customers and hence different pricing make it a much complex environment. It is in this scenario that choosing a good pricing model becomes important in accordance to your business model and scaling needs. Arvind then went on to invite Tushar from Saigun Technologies to share his thoughts and take the meet forward.
Tushar started out speaking on the relevancy or the need of pricing. The context here was clearly set when he announced that the discussion here is setting up ideas on enterprise pricing which is a whole different ball game as compared to consumer pricing. Factors like evaluation of potential customers, kind of money received from them, directing sales teams, consistency and setting a value to the offering brings in the need of pricing. He then went on to speak on the various challenges in enterprise pricing such as long decision cycles, decision matrix complexity and competition, no matter how good or new the idea is can never be neglected. A great example he shared was the case of Saigun’s HR product which is different to an HR manager and to a CEO. An HR manager would see it as tool which would reduce his work and a CEO would see it as an investment and in turn happily show a few pink slips to some of his HR managers. Tushar also spoke lengths and breadths on total cost of ownership of the product as well as the brand image when setting up your price. A cost is not just determined by the development cost but the service associated with it, the tenure of such a service is an important consideration. One cannot afford to give service away free. Brand becomes important in case when you have an established player in the market already. A SAP can price its product at 2 million but it is fairly practical to say that only SAP can. This is because of the trust and recognition it has built for all these years it has been in existence.
Tushar then spoke on the key parameters to a pricing strategy. Geographic focus and segregation of the offering based upon location always helps. The inclination of the pricing strategy to the company’s overall business strategy is another parameter one should look at. The case of virgin market and mature market were discussed to great detail by all participants. Tushar also shared that apart from his experiences the book written by Nagel on Strategy and Tactics of Pricing has helped him a lot. By this time the crowd appeared to really appreciate the thoughts of Tushar and his experiences. He then concluded with a short brief on the need to do discounting and how discounting eventually becomes a strategic view more than just being operational. He was applauded by all and then Arvind invited Tarun Anand from Semusi to take center-stage and share his thoughts on selling to enterprise customers, in his case, telecommunication service providers or telcos.
Tarun started off with his encounter with an Indian telco. His product offering took off on Nokia’s platform and with Middle-East customers. The product was well received and this is when Tarun decided to launch it in India too. The subsequent agreement with an India telco major pushed the product to India. However, moving forward it became clearer when the telco abruptly changed requirements and priced the product to almost 1/5th of its competition. There were cases of non-payments and violation of contract agreements with the telco as well. The rationale given here was that the product is new and there are not many takers for it. But when Tarun checked, the product had sufficient number of users as well as sufficient number of dropouts. It is here when it becomes important to choose a suitable pricing model, the two he suggested were full user pricing (FUP) and promotion pricing. In this case, eventually he rebranded his product and sold it through the app store which gave him a much better insight to the actual customers of his product.
After Tarun it was Prashant from Signals who was invited to take center stage. Tushar started describing pricing techniques for an app store. The question of whether the product should be transactional priced, free, in-app pricing or ad-based was put forth by him. The even bigger question that needs an answer first is to go free or to go paid for your product. This question really gets answered by a research on ‘when the user is actually ready to be monetised’. Tushar then went to describe the price decision matrix which was split across quadrants of short life span, long life span and instant realisation, realisation after a period of time. Games, Social network apps, Dropbox and VAS were examples spread across these quadrants. So the eventual decision is to place your product in one such category and accordingly accept the price model that comes with it. Another very critical talk by Tushar was on choosing a price point, the baseline (99 cents), the maxima ($1.20) or the median (between 99 cents and $1.20) for your product or app. If one goes by baseline, then the app store owner has no incentive to give your app the preference in his listing even if you have greater number of downloads. So he suggested that it is always good to keep your product priced at maxima and then slowly move towards baseline pricing depending upon the realisation value of the product. Tushar concluded his talk by adding some avoidance measures when choosing an advertisement based model.
It clocked 5:30 PM and refreshments followed in the form of tea and samosas along with flowering of ideas by everyone in regards to the overall feedback on the initiative and the format of the initiative, ways it should be carried out in the future. Finally everyone joined in to celebrate Avinash birthday and cut a cake which was the most pleasant surprise of the day. Sign of great things to come from this emerging community of product leaders.
