To read the original Forbes article, click here.
At many software companies, there’s a puzzling paradox: Executives and their teams iterate and refine virtually all aspects of their operations, yet they let pricing, one of the most crucial parts of running a business, fall by the wayside. They decouple pricing from the product life cycle and the business as a whole, treating it as a one-time event rather than an ongoing process.
By doing so, however, software executives are shortchanging themselves and their teams. In essence, they become beholden to events, passive actors when they should be anything but.
Software Pricing and the Product Development Lifecycle
This Forbes article covers the following topics:
- It is illogical to decouple pricing from the product development lifecycle. Software companies iterate on virtually every other aspect of their business, yet pricing–arguably the most important element of a product’s profitability and ultimate success–is left by the wayside.
- Event-based pricing leads to underpricing. The event-based pricing paradigm, where pricing is reimagined, say, once every few years, tends to create a yo-yo effect—it takes long to implement corrective actions that improve packaging and pricing, putting software leaders at risk of underpricing the value they deliver.
- Event-based pricing fails to treat pricing as a hypothesis to be validated. All models are underpinned with assumptions. Validating assumptions over time is crucial to accuracy and high performing pricing strategies.
- Software leaders should build some pricing expertise internally rather than fully outsourcing it. The more advanced components of pricing can be outsourced. This allows them to learn pricing fundamentals and wrap them around how they build products and bring them to market.
- Continuous Monetization is the opposite of event-based pricing. It solves the reactionary nature of pricing putting pricing front and center in the product development lifecycle.Continuous monetization, akin to continuous delivery in Scrum, requires a mindset shift and the building of pricing expertise internally.
You can read our full article on Forbes: In Software, Decoupling Pricing From The Product Life Cycle Is A Losing Strategy.
