Welcome to Next Future Today, hosted by Dan Keldsen.
Find more episodes at https://NextFutureToday.com, on YouTube, or in your favorite podcast app.
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.
“Software Profit Streams” is remarkably easy to understand, beautiful on the eyes, but quickly allows you to go VERY deep into software pricing.
- 🕰️ 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.
- 🧑🤝🧑 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.
- Customer benefit analysis: Assessing the economic value or structure of a software’s benefits.
- Ilities: Reliability, Maintainability, Curability, Scalability; attributes that can be recast into economic terms to inform pricing decisions.
- Infrequent transaction: An event that occurs rarely, such as selling a house or revisiting pricing decisions.
- Intangible benefits: Non-quantifiable benefits of a product or service, such as being a nice company to work with.
- External triggers: Factors outside of a company that can impact pricing decisions, such as regulatory changes or competitive forces.
More about Luke’s book at:
https://amzn.to/3KgdLqC (this is an affiliate link)