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๐—›๐—ผ๐˜„ ๐˜๐—ผ ๐—ณ๐—ถ๐—ป๐—ฑ ๐˜๐—ต๐—ฒ ๐—ฟ๐—ถ๐—ด๐—ต๐˜ ๐—ฝ๐—ฟ๐—ถ๐—ฐ๐—ถ๐—ป๐—ด ๐—ณ๐—ผ๐—ฟ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฐ๐—ผ๐—ฟ๐—ฝ๐—ผ๐—ฟ๐—ฎ๐˜๐—ฒ ๐˜ƒ๐—ฒ๐—ป๐˜๐˜‚r

โšกย ๐—›๐—ผ๐˜„ ๐˜๐—ผ ๐—ณ๐—ถ๐—ป๐—ฑ ๐˜๐—ต๐—ฒ ๐—ฟ๐—ถ๐—ด๐—ต๐˜ ๐—ฝ๐—ฟ๐—ถ๐—ฐ๐—ถ๐—ป๐—ด ๐—ณ๐—ผ๐—ฟ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฐ๐—ผ๐—ฟ๐—ฝ๐—ผ๐—ฟ๐—ฎ๐˜๐—ฒ ๐˜ƒ๐—ฒ๐—ป๐˜๐˜‚๐—ฟ๐—ฒ, by example of a subscription business we built for fahrrad.de



In 2021 we were contracted by fahrrad.de respectively internetstores GmbH to build a bike subscription business for them, similar to Swapfiets.



๐—”๐˜ ๐—ณ๐—ถ๐—ฟ๐˜€๐˜ ๐—œ ๐˜„๐—ฎ๐˜€ ๐—ฏ๐—น๐—ฎ๐—ป๐—ธ: how should we find a great entry price to start off with? What was a good price? Measured against what?



Fundamentally there are two strategies to determine a price:



๐—œ๐—ป๐˜€๐—ถ๐—ฑ๐—ฒ-๐—ผ๐˜‚๐˜ and ๐—ผ๐˜‚๐˜๐˜€๐—ถ๐—ฑ๐—ฒ-๐—ถ๐—ป.



What does that mean?



Inside-out: you ๐—ฑ๐—ฒ๐˜๐—ฒ๐—ฟ๐—บ๐—ถ๐—ป๐—ฒ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฐ๐—ผ๐˜€๐˜ ๐—ฏ๐—ฎ๐˜€๐—ถ๐˜€ ๐—ฎ๐—ป๐—ฑ ๐˜€๐—ฒ๐˜ ๐—ฎ ๐—ฝ๐—ฟ๐—ถ๐—ฐ๐—ฒ ๐˜๐—ต๐—ฎ๐˜ ๐—ฐ๐—ผ๐˜ƒ๐—ฒ๐—ฟ๐˜€ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฐ๐—ผ๐˜€๐˜. Ideally a bit more in order to make a profit ;)



Outside-in: you look at how competitors are pricing their services. If there are none you might look at indirect competition that delivers a similar value to the user: in our case it was public transportation, e-scooters etc.



By ๐—ฐ๐—ผ๐—บ๐—ฏ๐—ถ๐—ป๐—ถ๐—ป๐—ด ๐—ฎ๐—น๐—น ๐˜๐—ต๐—ฒ๐˜€๐—ฒ ๐˜€๐—ผ๐˜‚๐—ฟ๐—ฐ๐—ฒ๐˜€ ๐—ผ๐—ณ ๐—ธ๐—ป๐—ผ๐˜„๐—น๐—ฒ๐—ฑ๐—ด๐—ฒ ๐—ฎ๐—ป๐—ฑ ๐˜€๐—ฒ๐˜๐˜๐—ถ๐—ป๐—ด ๐—ฎ ๐˜๐—ฎ๐—ฟ๐—ด๐—ฒ๐˜ ๐—ฝ๐—ฟ๐—ผ๐—ณ๐—ถ๐˜๐—ฎ๐—ฏ๐—ถ๐—น๐—ถ๐˜๐˜† ๐—ฝ๐—ฒ๐—ฟ ๐˜‚๐—ป๐—ถ๐˜ we were able to find a price that was both competitive as well as covered our expected cost of the business case.



To wrap up:


- ๐˜‚๐—ป๐—ฑ๐—ฒ๐—ฟ๐˜€๐˜๐—ฎ๐—ป๐—ฑ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ฏ๐˜‚๐˜€๐—ถ๐—ป๐—ฒ๐˜€๐˜€ ๐—ฐ๐—ฎ๐˜€๐—ฒ, your cost drivers and your target profitability (per unit and at large)



- create a price ๐—ฏ๐—ฎ๐˜€๐—ฒ๐—ฑ ๐—ผ๐—ป ๐˜๐—ต๐—ฒ ๐—ฏ๐˜‚๐˜€๐—ถ๐—ป๐—ฒ๐˜€๐˜€ ๐—ฐ๐—ฎ๐˜€๐—ฒ (inside-out)



- understand your market, your competitors or similar value drivers and ๐—ฝ๐—ฟ๐—ถ๐—ฐ๐—ฒ ๐—ฎ๐—ฐ๐—ฐ๐—ผ๐—ฟ๐—ฑ๐—ถ๐—ป๐—ด๐—น๐˜† ๐˜๐—ผ ๐—ฏ๐—ฒ ๐—ฐ๐—ผ๐—บ๐—ฝ๐—ฒ๐˜๐—ถ๐˜๐—ถ๐˜ƒ๐—ฒ (outside-in)



- ๐—ฏ๐—ฒ๐˜€๐˜ ๐—ฐ๐—ฎ๐˜€๐—ฒ: outside-in price is higher than the inside-out price so you have some wiggle room ;)



๐—›๐—ผ๐—ฝ๐—ฒ ๐˜๐—ต๐—ฎ๐˜ ๐—ต๐—ฒ๐—น๐—ฝ๐˜€ ๐˜†๐—ผ๐˜‚ ๐—ณ๐—ถ๐—ป๐—ฑ ๐˜๐—ต๐—ฒ ๐—ผ๐—ฝ๐˜๐—ถ๐—บ๐—ฎ๐—น ๐—ฝ๐—ฟ๐—ถ๐—ฐ๐—ฒ ๐—ณ๐—ผ๐—ฟ ๐˜†๐—ผ๐˜‚๐—ฟ ๐—ป๐—ฒ๐˜„ ๐˜€๐—ฒ๐—ฟ๐˜ƒ๐—ถ๐—ฐ๐—ฒ ๐—ผ๐—ฟ ๐—ฝ๐—ฟ๐—ผ๐—ฑ๐˜‚๐—ฐ๐˜ ๐—ถ๐—ป๐—ป๐—ผ๐˜ƒ๐—ฎ๐˜๐—ถ๐—ผ๐—ป!





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