Slatted Pricing: Understanding Matthew Brunken's Approach
Overview
Pricing innovative products can be a challenging task for entrepreneurs. It requires careful consideration of the product's value proposition, customer discovery framework, and product-market fit. Matthew Brunken, a financial consultant and entrepreneur, emphasizes the importance of customer interviews and customer success in the pricing process.
To determine the price of a product, Brunken suggests using the slatted-pricing method. This method involves extracting a multiplier from known variables to extend to similar products. For instance, if a company wants to price competitor (electric) surgical tables, they can use the slatted-pricing method to determine the estimated price of the tables.
The slatted-pricing method involves finding a few known prices for new products. Then, the company can look for average selling prices for used models of the known equipment from a used marketplace. Brunken recommends using tools like Averagefinder.com to calculate the average price that an item sold at over the past 90 days.
Once the company has enough numbers for one set of multipliers, they can divide the new price by the average used price to arrive at the used-to-new multiplier. By doing the same with the known refurbished price, they can arrive at a refurbished-to-new multiplier.
Next, the company can apply the multipliers to the competitor's products to estimate their new price. Finally, they can average the estimated prices to arrive at an estimated price for the product.
Pricing a product requires a careful consideration of the value proposition, customer discovery framework, and product-market fit. Brunken suggests using the slatted-pricing method to determine the estimated price of a product. This method involves finding a few known prices for new products and calculating the multipliers for used and refurbished products. By applying the multipliers to competitor products, the company can estimate the new price of the product.
Frequently Asked Questions
What is a Slatted Pricing System and How Does It Work?
A slatted pricing system is a pricing strategy that involves offering multiple price points for a product or service, each with a different set of features or benefits. Customers can choose the price point that best fits their needs and budget. In a slatted pricing system, the prices are arranged in a tiered structure, with each tier offering more features or benefits than the previous one. Customers can upgrade to a higher tier by paying a higher price.
What Are the Benefits of Using a Slatted Pricing System?
Using a slatted pricing system can offer several benefits, such as:
Increased revenue: By offering multiple price points, a business can attract customers with different budgets and needs, resulting in more sales and revenue.
Improved customer satisfaction: Customers can choose the price point that best fits their needs and budget, resulting in higher satisfaction and loyalty.
Flexibility: A slatted pricing system can be easily adjusted to meet changing market conditions or customer needs.
Better market segmentation: By offering different price points, a business can target different customer segments and tailor its marketing efforts accordingly.
How Does Matthew Brunken's Pricing Strategy Differ from Traditional Methods?
Matthew Brunken's pricing strategy involves using a slatted pricing system that is tailored to the specific needs of his customers. He believes in listening to his customers and identifying the features and benefits that are most important to them. He then offers multiple price points that reflect these needs and preferences. This approach differs from traditional pricing methods that rely on a one-size-fits-all approach.
Can a Slatted Pricing System Be Customized to Fit My Specific Business Needs?
Yes, a slatted pricing system can be customized to fit the specific needs of a business. The prices and features can be tailored to the target market, the product or service being offered, and the business's overall strategy. A business can also adjust the pricing tiers as needed to reflect changing market conditions or customer needs.
What Are Some Examples of Successful Implementation of Slatted Pricing Systems?
Some examples of successful implementation of slatted pricing systems include:
Dropbox: Dropbox offers a free version of its cloud storage service with limited features, as well as paid versions with additional features and storage capacity.
Mailchimp: Mailchimp offers a free version of its email marketing software with limited features, as well as paid versions with additional features and functionality.
Spotify: Spotify offers a free version of its music streaming service with ads and limited features, as well as paid versions with ad-free listening and additional features.
Are There Any Potential Drawbacks to Using a Slatted Pricing System?
While a slatted pricing system can offer many benefits, there are also potential drawbacks to consider, such as:
Complexity: A slatted pricing system can be more complex to implement and manage than a traditional pricing model.
Confusion: Customers may find it confusing to choose between multiple price points and features.
Cannibalization: Offering multiple price points may lead to cannibalization of sales from higher-priced tiers to lower-priced tiers.
Overall, a slatted pricing system can be an effective way to increase sales and customer satisfaction, but it requires careful planning and execution to be successful.