5 principles to help you set the right price

For companies and individuals that provide products and services, 'price setting' is a very important factor that is directly linked to profits. However, setting the right price for a product or service is very difficult when there is nothing to refer to. The website ' PriceOps ' explains 'five pillars important for pricing' especially in SaaS that operates services on the Internet.

The 5 Pillars of Price Ops
https://priceops.org/

◆ Pillar 1: Clearly indicate pricing
Many services offer multiple price plans depending on the frequency of use of the service and the environment of the user. The key here is to clarify the services that the plan can provide when presenting each plan to the user. By clarifying the services provided by each plan, users can select the most suitable service, and service operators can avoid confusion during price adjustments and temporary discounts.

Pillar 2: Understanding the user's schedule
By knowing when the user started using the service and when the plan was changed, it becomes easier to verify the validity of the billing plan. In addition, it is also possible to set a 'trial period in which all functions can be accessed for several weeks from the first access'. Understanding user schedules is also important for proper billing.

◆ Pillar 3: Usage measurement
As mentioned above, it is important to know the user's service usage start date for proper billing, but it is also important to know the 'number of times the service was used' and 'functions used'. In order to accurately grasp the user's service usage status, it is necessary to track the ``identifier assigned to each user'' and ``identifier assigned to each function'' and record the increase and decrease of each identifier and the date and time of increase and decrease. At this time, even for functions that can be used for free, it is necessary to record the number of times and timing of use in anticipation of future charges.

There are two possible timings for recording the number of events, depending on the type of event.

・ Record when an event occurs
If the event occurs infrequently, the technique of recording the number of times an event occurs is suitable. For example, events such as 'create new account', 'upload file', 'execute report generation'.

・Record by time unit
Recording the number of times per time unit is suitable when events occur frequently or when high execution speed is required. For example, events such as 'download request' apply.

◆ Pillar 4: Confirmation of eligibility
If your billing plan limits the number of times users can use functions or limits the file size, it is necessary to detect overuse. If confirmation of overuse of each function is prioritized over performance, it is OK if you check the eligibility for each use of the function. Conversely, if maintaining performance is prioritized over checking excess usage, it is necessary to periodically check whether the effect is being used.

Pillar 5: Use of pricing tools
As mentioned above, it is necessary to measure the usage status and check the eligibility for each user and function in order to set an appropriate price. Performing these operations manually not only costs a lot of money, but also poses the risk of human error. For this reason, it is desirable to use tools that provide the necessary measurement capabilities for pricing.