This interview between Dan Keldsen and Luke Hohmann discusses the importance of pricing and profit streams in software businesses, based on Luke's latest book "Software Profit Streams" a spiritual successor to the long legacy of "canvas" style books first started by Business Model Generation.
Key Points
- 🕰️ Time-based cadence is one of the triggers to change pricing.
- 🏢 Internal triggers like adding new features can also necessitate pricing changes.
- 🌍 External triggers such as regulatory changes, competitive forces, or hardware changes can impact pricing decisions.
- 💰 Customer benefit analysis is the foundation for effective pricing strategies.
- 🎯 Ilities (Reliability, Maintainability, Curability, Scalability) can be recast into current or future economic terms to inform pricing and licensing decisions.
- 🤝 Intangible benefits of working with a company, such as being more flexible and willing to listen, should be considered in customer benefit analysis.
- 📈 Pricing decisions should be revisited at least once a year, but more frequently in fast-growing products.
- 📚 The book "Software Profit Streams" provides guidance on pricing and packaging decisions in a remarkably easy to understand, beautiful on the eyes, but quickly allows you to go VERY deep into software pricing.
- 🧑🤝🧑 Collaborative decision-making is essential for pricing strategies.
- 🧠 Simulations can be useful in building mental models, but relying too much on them can be risky due to unknown external triggers.
