Pricing strategy · Marketing Strategy

How to "value" a beautiful product?

Mark Graham President & CEO at Caiman, Inc.

March 29th, 2016

We have recently brought to market a mobile device charging and connectivity product targeted at the hospitality industry. Our design allows for cost reductions/efficiencies over alternatives, improved guest experience/reviews, branding loyalty, andincreased revenue. In short, measureable and significant contributions to the bottom line with reduced effort required over the current.

Our initialthought was to target the obvious hard value proposition mentioned aboveto hotel brands and hotel owners. Strangely, even though they are shown significant real monetary value with little to no effort they don't seem to care much.

Recently we started to change our approach and emphasize one other quality...our product is beautiful. This has caused tremendous interest - the emotional response winning over the hard value proposition. Notwithstanding we are now compelled to come up with value pricing based on appearance in a B2B world.

Any thoughts on valuing/pricing for appearance?
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Michael Brill Technology startup exec focused on AI-driven products

March 29th, 2016

The value is (R+M)/2 or $31.92, whichever is larger... seriously, nobody here can value "beautiful product" in the abstract. If you want some generic metric then find a handful of Apple/Xiaomi dichotomies, average those ratios and there you go.

But pricing is dependent on your competitive positioning. Understand what competitors charge, whether you're a premium or value product, triangulate that with your COGS, market share goals and customer economics, and you'll have a price range. Test that with customers. If you're going after premium then iterate until you lose ~ 20% of your business due to pricing and that's probably your best pricing.

Also, don't think about your product as a beautiful product that you sell to a company. Think about what this enables that company to present to their customers. Even though you're selling to a business, you have to remember that your product makes those businesses cool to their customers. That has a ton of value - probably well-exceeding the operational cost reduction you provide.


Nigel Dessau Chief Marketing Officer at Wellsmith, LLC

March 29th, 2016

I would really be sure you understand your value proposition. Look up how to do one if you don't know. It will help you be clear of if your value is aligned to market need and how it looks compared to others. Then you will have a better idea on how to price it. Get your Value Prop wrong and your pricing will miss too.

Kyle Bailey Managing Director at Frontburner Marketing, Speaker, Author

March 29th, 2016

Here are a few questions I'd want to know so that I can contribute intelligently, if you're willing to share: - you said you pitched brands and owners, but what specific positions did you pitch? I'm assuming C-suite, but what positions exactly? Every position up the purchase chain in a corporation has a different set of problems to solve, so saying that they were "shown value" doesn't really mean anything without knowing who "they" are/were - Who has perceived the beauty value prop? Who has shown interest? Can you interview them? Getting their perception is critical. - Next, will they (the people who have "seen the beauty") buy? CAN they buy? If so, - what problem does this solve for them? - can you put product out in exchange for objective feedback? Sincerely, Kyle Bailey Managing Director Frontburner Marketing www.frontburnermarketing.net 512-876-9111 - *Facebook* /thekylebailey - *Twitter* @thekylebailey - *LinkedIn* /thekylebailey

Ryan Rigterink Midwest Manager at Hematogenix Laboratory

March 29th, 2016

Based on the limited info, I would consider retooling your revenue model.  If your revenue generation proposition doesn't hit a threshold to matter to your target audience consider dropping your price and capturing that value over time in MRR.  You can still sell on the beauty if that gets traction.

Rob G

March 29th, 2016

what were the results of your pricing discussions with your prospects before you built your product?  What sort of purchase commitments did you get before you built?   Regardless, talk to your customers/prospects.  Ask them how much they are willing to pay.  Not every buyer buys for the same reasons so one size may not fit all.  

Michael Brill Technology startup exec focused on AI-driven products

March 29th, 2016

Is it really surprising that design is so important? Isn't that the one thing that actually differentiates *your* customers' product to *their* customers? Saving a few dollars on power bills just might not be that important to the people you're selling to while creating a forward-looking environment is extremely important.

Maybe your core value proposition is indeed around design and usability. Financial performance is just a tool your customers use to sell it internally. Sizzle, steak and all that.

It would also seem to command premium pricing.

Shel Horowitz I help organizations thrive by building social transformation into your products, your services, and your marketing

March 29th, 2016

Does design add value? My one-word answer: Apple. All the way back to 1984 and the very first Mac, Apple has been able to charge premium prices based largely on cool design/ease of use. Of course, they have a pretty good infrastructure to support it and had the benefit of a celebrity CEO. Also, good design can lead to bottom-line justifications on premium price, e.g., lasts three times as long. I would think if this product is to be used in public spaces in the hotels (like the lobby), coolness will play a bigger role than if it's an amenity in the rooms. But it depends on whether people want guests hanging around in the lobby waiting for their devices to charge. Personally, I'd rather charge them overnight in my own room, and a regular old plug works just fine for that. But if it was a charge-in-five-minutes deal that I could use before heading out for a day of exploring, that would be different.

Mark Graham President & CEO at Caiman, Inc.

March 29th, 2016

to add some detail. 

I was seeking clarity on how aesthetically pleasing products are presented as value and if possible correlated to price.  The nature of aesthetics is inherently subjective.   

I believe you find this phenomenon in a B2C world more.  B2B is usually preoccupied with proposing cost savings or revenue generation.  This is not the case here.  

Getting into the hospitality industry nuances was not the nature of my question but to help a little.  Hotel brands are a franchise operation focused on total revenue and brand popularity.  Fixed costs to hotel brands are not their problem because passed to hotel owners.  Hotel owners performance is measured on average daily room rate and average revenue per room.  Their metrics are variable costs.  Hence a fixed cost to a hotel owner is largely insignificant to them unless the item is really high cost or high revenue.

Not looking for anyone to validate how the hospitality industry works and all its nuances.  It would take a long time to go into this.

Slightly different way to ask question.  What is the value of beautiful product?  Already products is wanted.  Would like a justification of price instead of asking how much do you want to pay ;)

Rob G

March 29th, 2016

+1 for what Mr. Brill said.  don't over work this.  You know your competition and you know where you'd like to price your product.   Talk to some customers.  Tell them you are trying to determine price.  Give them what you think is a high price or a low price and see how they react.  adjust from there.  For our current product we did lots of customer interviews before we built a line of code.  We didn't ask them about price.  everyone always asked and we told them.  To wrap up each discussion we asked them (among other things) if there was any they would change.  THE #1 comment we received was "your pricing is too low..."  We don't want pricing to be a sticking point - we want people to be pleasantly surprised.  We increased and did more interviews.   We get zero objections and fewer, but still some suggestions to increase pricing.  We think we are where we want to be on price for now.  This gives us room to increase prices as we release more features/value and i'm sure we will eventually find the ceiling.  Our pricing objective is not 'how can we maximize profit, but how do we minimize purchase friction. 

Mark Graham President & CEO at Caiman, Inc.

March 29th, 2016

Thank you for the responses.

I think there is still a problem of separating B2B from B2C here.  One requires justification and the other not so much.

So how did the Bellagio in Las Vegas justify 10 million for the sculpture in the lobby?  How did the artist present this "value".  So many gamblers would spend more over x amount of time because they felt happier from seeing it?

Should aesthetics be simply considered something that elevates desire to buy the product but not price or value from price paid?  In this case pricing should just be based on what a company wants to earn factoring traditional costs of manufacture and profit expectations.  

Something wrong here everyone.  Somehow a person buying art for a business must justify the price in some way relative to other options.  Something in the B2C world there is no requirement to justify price but in B2B it is less defendable to say "I just liked it".