You’ll never be done

…

At the end of the day, there’s no silver bullet when it comes to pricing. There are just many things you can and should probably test. Be ready to make trade-offs – whether that’s knowingly leaving money on the table or being OK with fewer customers who pay you more.

Make peace with the fact that your pricing will never be perfect.

So, what is pricing (+ packaging) anyway?

… align on what you mean when you use certain words. So, pricing and packaging. Two words. Two sides of the same coin.

💰 Pricing: How, and how much, customers pay

📦 Packaging: How and what customers can buy

Pricing is a strategy

If you treat pricing and packaging as a strategy and not just a box you need to tick, it can create step changes in growth for your company.

See also Anthony Pierri’s post on LinkedIn: Pricing models for product-led growth.

For example, if the initial thing I come up with is…

Understand better the inner working of this particular thing

Asking “how?” makes it clear that something is missing; so it becomes…

Ask John and Jane about the inner working of this particular thing

Again, asking “how?” still indicates that there’s some room for more detail…

• Ask John in our next 1-on-1 about the inner working of this particular thing
• Ping Jane on Slack if there’s any documentation about the inner working of this particular thing

Now asking “how?” in any of these two is just silly (they’re self-explanatory). So we’re done here. We have now 2 new concrete small actions to take!

Plans are worthless, but planning is everything.

— Dwight Eisenhower

Quote Investigator

The details of a plan which was designed years in advance are often incorrect, but the planning process demands the thorough exploration of options and contingences. The knowledge gained during this probing is crucial to the selection of appropriate actions as future events unfold.

Wardley’s unproven method of thinking about investment.

Step 1: Ignore the consultants, business gurus and analyst reports.

Step 2: Gather some actual practitioners.

Step 3: Ask them what matters.

Step 4: Categorise the list.

Step 5: Map the perspectives [Parallel]

Step 6: Identify areas of investment. [Parallel]

Step 7: Aggregation and comparison.

TL;DR

1. Be clear on your purpose.
2. Understand the landscape.
3. Realise that the landscape changes.
4. Analysts are a good signal for the market but that may not be where you should invest.
5. Diversity matters.

DON’T: Say it’ll increase sales

DO: Talk about compliance

DON’T: Pretend to be a lawyer

DO: Speak to a lawyer

DON’T: Promise AI will fix everything

DO: Explore vendor options

DON’T: Narrow the conversation solely to print disability

DO: Talk about readiness and future-proofing

DO: Talk to experts

The LVT follows a Top-Down framework: Vision > Strategic Goals > Bets > Initiatives. A company’s vision is broken down into a number of strategic goals, which are then defined into a number of bets, out of which value streams and initiatives with specific, targeted outcomes drive achievement from the bottom up.

Strategic layer

1. Ambitious Mission — What is our destination as an organisation?
2. Strategic Goal — What does the organisation need to achieve to get there?
3. Strategic Bet — What strategies are we betting to achieve the goal?

Tactical Initiatives

4. Promise of Value — What value are we offering to customers to help us do that?
5. Promise of Delivery — How much are we investing?

See also:

1. What is The Lean Value Tree | by Product Stories & Observations | Medium
2. How To Get Buy-In For A New Product Strategy That Focuses On Customer Problems | by Product Stories & Observations | Medium

Strategic ≠ Planning

What most “strategic planning” is in the world of business has nothing to do with strategy. It’s got the word, but it’s not. It’s a set of activities that the company says it‘s going to do.

… but the results of all of those are not going to make the company happy, because they didn’t have a strategy.

What’s a strategy?

strat-e-gy
noun
An integrative set of choices that positions you on a playing field of your choice in a way that you win.

Strategy has a theory

• Here’s why we should be on this playing field, not this other one
• Here’s how we’re going to be better than anybody else at serving the customers on that playing field
• A strategic theory must be coherent and doable.

Planning

• You control costs.
• You are the customer.
• It’s comfortable. 🙂

Strategy

• Actual customers are the customers.
• You don‘t control them.
• You don’t control revenues. 😬

[Strategy] … means putting yourself out and saying, “here’s what we believe will happen. We can’t prove it in advance, we can’t guarantee it, but this is what we want to have happen, and that we believe will happen.”

Avoid the “planning trap”:

• Accept angst. 😬
  • You cannot prove in advance that your strategy is going to succeed
  • In strategy, you have to say, “if our theory is right, this will position us in an excellent way”
  • Not knowing for sure isn’t bad management. It‘s great leadership.
• Lay out the logic. Then tweak.
  • If something that you say is in the logic that would have to be true for this to work is not working out quite the way you hoped, it’ll allow you to tweak your strategy
  • Strategy is a journey. What you want to have is a mechanism for tweaking it, honing it, and refining it so it gets better and better
• Keep it short—ideally 1 page.
  • Here’s where we’re choosing to play …
  • Here’s how we’re choosing to win …
  • Here are the capabilities we need to have in place …
  • Here are the management systems …
  • … and that’s why it‘s going to achieve this goal/aspiration we have.

The distinction between a map and a graph is that in the map, the space has meaning.

…

Almost everything you’ve ever seen in business that calls itself a map, is instead a graph: mind maps are mind graphs, business process maps are business process graphs, etc. What gives space meaning is the anchor … combined with the position of pieces … and consistency of movement …

— Simon Wardley in Simple tips for managing any project

The actual model that more closely resembles what we need should have the bare minimum of E2E tests, quite a number of service tests and the vast majority should be unit tests.

Exponential model: x = 10^hy

So if the height h goes from 1 to 2 to 3 then we have 1 E2E test to 100 service tests to 10,000 unit tests.

There is a physical object which has these properties, it is called an exponential horn.

Part 1: Why Microsoft’s reorganization is a bad idea

Part 2: The uncanny valley of a functional organization

Part 3: Services, Not Devices is the best way forward for Microsoft

(via stratēchery by Ben Thompson )

So, should you launch a paid app?

Maybe.

Every entrepreneur is different. If you want to build a big/impactful business, it’s not the right path (…). If what you want is a bootstrapped freedom-from-employment effort or are passionate about an idea that’s a lousy fit for in-app purchases, paid apps are a great path.