Yoda, how do I price what

I sell?

How to Price what you Sell?

Alok Rodinhood Kejriwal

Founder – 2win group & therodinhoods

Why?

Why this PPT?

I’ve sold crazy s*** in the past 29 years. From infant socks to oil drums to LC (letter of credit) discounts to advergames to virtual cars in mobile games. In the process, I’ve always been confronted with the question “How do I price this?!”

I’ve also come across zillions of newly minted entrepreneurs struggling with this tough question.

Wrong is the Question you

Ask…

The wrong question!

After deep reflection, I have realized that the Question itself is WRONG.

Yup. Pricing doesn’t matter. It’s a ‘side effect’, an ‘occurrence’, a ‘consequence’.

In the next few slides, I shall explain why…

Exercise 1

Carefully study the next chart and THINK of products and services (not related) that fit in

the (?) Boxes

? ?

? ?

Innovative

Ordinary

High $$$Low $

Need a nudge?

If you didn’t understand the chart, try this:

- The Top Right Box (green) represents something that is High in $$$ (price) and Innovative

- The Bottom Right Box (blue) represents something that is High in $$$ (price) and Ordinary

- The Top Left Box (pink) represents something that is Low in $ (price) and Innovative

- The Bottom Left Box (purple) represents something that is Low in $ and Ordinary

Now think of products and services that fit the chart.

Once done, go the next slide where I reveal my choices.

Post-it Notes (3M) iPhone

Everything Nothing

Innovative

Ordinary

High $$$Low $

Exercise 2

Volume vs. Price

? ?

? ?

High Volume

Low Volume

High $$$Low $

Lays Chips Rare or Nothing

Anything Rolls-Royce

High Volume

Low Volume

High $$$Low $

Exercise 3

Losses, Profits & Volume

? ?

? ?

High Volume

Low Volume

LossesProfits

Coke e-Com Companies

Services firms

Failed Startups

High Volume

Low Volume

LossesProfits

Exercise 4

Impulsive vs. Informed Buys

? ?

? ?

High Volume

Low Volume

ImpulsiveInformed

Grocery iTunes

Luxury Goods

Airport Shopping

High Volume

Low Volume

ImpulsiveInformed

Exercise 5

Volume vs. Competitors

? ?

? ?

High Volume

Low Volume

High Competition

Low competition

GoogleSearch Mobile Apps

Pet Shops Bridal Services

High Volume

Low Volume

High Competition

Low competition

Relief!

No more charts

(feel free to create your own exercises using more parameters)

What did you learn?

Question

Let’s examine the charts once again, grouped together:

Analysis

Free to Unaffordable with Zero/Little Competition

Free

Google

No /Little Competition

Low Price

Post-it notes

No /Little Competition

High Price

iPhone

No /Little Competition

Unaffordable

Rolls-Royce

No /Little Competition

Irrational to High Pricewith Massive Competition

Irrational (Free) Price

Flipkart

Lots of Competition

Low Price

Grocery

Lots of Competition

Medium Price

Services: Firms like ad

agencies/Hiring firms

Lots of Competition

High

Luxury Goods(Watches)

Lots of Competition

Now ask yourself, which of these Companies would YOU rather be?

Conclusion 1: Pricing doesn’t matter when

You sell INNOVATION

Google or Apple

Pricing DOESN’T matter

Conclusion 2:Pricing does matter when:

You sell what OTHERS sell

Services businesses

Pricing DOES matter

Meta Conclusion:Stay on the left. Price IS immaterial.

Low Price, Low Volume

High

High Price, High Volume High Price, Low Volume

Low

Zero Price, High Volume

HighLow HighLow

Low Price, High Volume High Price, Zero Volume

iPhone Rolls-RoyceCartier

General Services

CokeLaysiTunesPost-its

Bose FBGoogle

CompetitionCompetition Competition

Luxury Goods

MobileApps

Duty Free North KoreaBridal Services

Super famous paintings

What’s with the guys on the left who DON’T care about Price?!

GoogleApple

•Unbeatable technology•Patents, IP

Rolls-RoyceCartier

•Perfection of product•Brand recognition (built over years)

What’s with the guys on the right who only care about price?

Services Firms (ad agencies, recruitment

services, etc.)

•Me-too, competing on price•Marketing via personal contacts•Very people-dependent

Niche service providers

(e.g. Bridal services)

•Competing for small volumes•No guarantee of sustainability or profits

Conclusion:

• FREEDOM from pricing comes from Innovation,

Perfection, Technology and Creating IP; NOT from clever

Costing, cut throat Competition or gushing Volumes.

• Service firms (e.g. Infosys, TCS, Wipro) have built

Pricing POWER by mimicking great product companies.

• Pricing is NOT about Cost + Profits.

It’s about Delight + Uniqueness.

How to Price?Don’t think of cost &

margins. Instead think of HOW you

will be unique in your offering

Introduce INNOVATION, IRRESPECTIVE

of whether you price it or

not!!Keep delivering

PERFECTION no matter how ordinary your

sale. Perfection is a

long term price ruler

Constantly create IP. That will make you

develop PRICING POWER

Disclosures:

• The principles and guidelines spoken about in this

presentation are strictly my own ideas and MAY NOT be

feasible/practical for you.

• This document should serve as a guideline and

reference - not as a rule book!

Liked this presentation? Go through some more!

• Basic Funding Concepts for Entrepreneurs

• How to write effective e-mail proposals

• How to make an engaging PPT

• PR for Startups – a reference guide!

Connect with me!

e-mail - alok@rodinhood.com

Facebook - facebook.com/rodinhood Twitter - @rodinhood

My social network for anyone enterprising! therodinhoods.com

Presentations – www.slideshare.net/rodinhood