Pricing Model - Copy, or Create?


We've got a few competitors, one of whom is the "Big Fish" in the market. I've priced all of them out, and they have various pricing models - each different from the others. And the "Big Fish" has a very different model.

The question is, do we copy the most successful competitor and just tweak the model (i.e. instead of "$0.50 per X," we charge "$0.45 per X"), copy the rest of the field, or wrack our brains to come up with something unique? This last comes at a greater risk, since we know that the "Big Fish" has been working decently.

I know it's hard to answer without specifics, so I apologize. I just don't want to delve into the industry pricing models on here and bore everyone. :)

- Josh


asked Nov 18 '09 at 05:21
Josh Sam Bob
1,578 points

2 Answers


First and foremost you should make sure that the pricing model you are choosing will be profitable for you. It is possible that your competitor may be losing money or using the product as a loss leader.

Second, while you should never compete on price alone, you can't ignore current pricing for similar products. Your prospects will be comparing your product to others so be prepared to justify a higher (or lower!) cost than your competition.

Lastly, make sure your model will be easy to implement operationally. You don't want to put in place a complex fee structure only to find out that it is a billing nightmare every month causing you to field calls from clients who can't figure out how they are being charged.

answered Nov 18 '09 at 07:52
Oleg Barshay
2,091 points


Look at it from the POV of the customer. What is best for them? What is a good price for them?

Competing based on price alone is almost never a good idea. Focus on delivering value (actual and perceived) instead.

answered Nov 18 '09 at 05:56
Gabriel Magana
3,103 points

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