Product Pricing: How much should you charge?

Figuring out how much to charge for a new product or service is absolutely one of the hardest things to figure out.

Charge too much and you may miss the market.

Charge too little and you might leave money on the table.

There is no one answer to the pricing question for startups.  That is why I absolutely love the insights shared by Chris Dixon in a blog post he titled Pricing to the Demand Curve.

In this post Dixon gives us a quick lesson in economics 101.  He states:

the goal of pricing is to capture as much area under the demand curve as possible. In practice, the best way to do this is to find proxies for willingness-to-pay that are easy to observe and that customers will accept.

I suggest you go read Dixon’s full post to get his quick lesson on the demand curve.  He provides some fantastic theoretical and real world examples  from business you are familiar with.  

Dixon’s post is well worth the time spent understanding how the details apply to your situation.

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