Pricing Strategies For Online Products

Is Your Tier-Pricing Mean? Or is it above average? (Pardon the stats pun) 🤣 Normal Distribution Curve can guide Data-led changes in pricing tiers. Pricing of products and services is directly Associated with the revenues & profits That your business earns over time. If you are in an industry with a lot of competitors, You should follow the accepted market pricing When you launch your product early on. However, if your product is unique, you will see That you might be leaving money on the table By following the market-driven tiered-prices. So, how do you pivot or adjust your pricing? Start by looking at your revenue data. Revenue per user is what we need. Find the mean X-bar and std. dev. s. As an example, let X-bar = 30 & s = 5. Normal distribution curve shows that: * 68% of customers fall in (25, 35) range. --> This is the middle tier or Standard Plan. --> Shown in orange in the graphic. --> Priced between $25-$35 per user. * 14% of customers will fall in (35, 40) range. --> This is the upper tier or Premium Plan. --> Shown in blue in the graphic. --> Priced between $35-$40 per user. * 14% of customers will fall in (20, 25) range. --> This is the lower tier or Basic Plan. --> Shown in green in graphic. --> Priced between $20-$25 per user. * 2% lower outliers in the (0, 20) range. --> This is not an actual tier per se. --> Represents unwilling-to-pay users. --> Shown in pink in graphic on the left. * 2% upper outliers in the >40 range. --> This is a custom tier for bigger clients. --> Willing to pay on a larger scale. --> Shown in pink in graphic on the right. Actionable Insights: 1. Get clear data on expected revenue per user. 2. Identify Mean, std. dev., and chart them. 3. Apply Normal Distribution principles. 4. Give the best value in middle tier. 5. Offer incentives for low outliers. 6. Differentiate tier experiences. 7. Seek feedback from users. 8. Hire experts as needed. Shifting pricing constantly is bad business practice. However, if you discover that your product is In high demand, it is okay to adjust prices. It helps you to cut out unnecessary costs, And eliminate the lowest value users Who might use more resources. Follow Dr. Kruti Lehenbauer & Analytics TX, LLC for #PostitStatistics #DataScience #AI #Economics tips To improve top and bottom lines in SMBs! P.S.: Which tier do you buy a product at, when purchasing? Would love to hear your thoughts in the comments!

Cheese Board Pizza, Berkeley, CA (from my post yesterday about pipe cleaners) has a line out the door every single day. Here's their entire menu: One pizza type per day One sauce One salad When they sell out, they close Most founders would think: 'We need more options to attract more customers." Cheese Board thinks: 'Fewer options create more desire." The scarcity psychology that works: →Limited availability creates urgency →'Better get there before they sell out' vs. 'I can order anytime' →Simplicity reduces decision fatigue →No menu anxiety. You either want today's pizza or you don't. Exclusivity builds community →You're part of the group that 'gets it' →FOMO drives action →Missing out today means waiting until tomorrow How founders can apply this: Instead of: 20 pricing tiers Try: 3 clear options with limited spots Instead of: 'Available anytime' Try: 'Next cohort starts Monday, 15 spots only' Instead of: Endless customization Try: 'This is how we do it. Take it or leave it.' Instead of: Always available demos Try: 'Demo slots: Tuesdays only, 4 spots' The uncomfortable truth: Abundance doesn't create demand. Scarcity does. When everything is available, nothing feels special. Most founders fear limiting options will lose customers. But Cheese Board proves the opposite: constraints create cravings. What could you make scarce to make it more valuable?"

What is more important to revenue and bottom-line growth? Customer acquisition or customer retention? The answer: customer retention! Specifically, customer retention through value maximization! 🎯 In eCommerce, maximizing the value of each transaction is key - for both the brand and the customer. ⛳️ And, one of the most effective ways to maximize value, is  Product Bundling, i.e bundling complimentary or relevant products together, to be sold as one! Product bundling not only increases the Average Order Value (AOV) of a transaction but also increases the internalized relevancy of a brand to a consumer, driving repeat store visits and purchases. This is how product bundling can be effectively offered in eCommerce: 🔥 Best-Seller Bundles → Sell More of What Already Works Apple does this perfectly. The iPhone alone is great, but when it is bundled with AirPods and AppleCare, customers spend more, without much hesitation. 💡 Complementary Bundles → Pairing Products That Make Sense Skincare brands like @DrunkElephant offer routine-based bundles—cleanser, serum, and moisturizer—boosting both AOV and customer experience. 🎯 Subscription Bundles → Locking in Repeat Revenue Brands like @Huel and @AthleticGreens bundle their products into discounted subscription plans, increasing retention while ensuring customers never run out of their favorite products. I’ve seen firsthand how brands using the Appstle Bundles & Discounts app grow their AOV by 30-50%—without slashing margins! Bundling isn’t just about selling more; it’s about making buying easier for your customers. And when you do that, they buy more, stay longer, and keep coming back. 🚀 If you want to boost your eCommerce sales and AOV in 2025, start bundling your products now. #Appstle #customerretention #walletshare #subscriptions #memberships #loyalty #bundling #shopify #shopifyplus

Stop guessing your way to a higher AOV.   𝗕𝘂𝗻𝗱𝗹𝗶𝗻𝗴 𝗱𝗼𝗻𝗲 𝗿𝗶𝗴𝗵𝘁 = 𝗽𝗿𝗼𝗳𝗶𝘁 𝘂𝗽, 𝗰𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 𝗱𝗼𝘄𝗻. 👇 𝗛𝗲𝗿𝗲’𝘀 𝘁𝗵𝗲 𝗯𝗿𝘂𝘁𝗮𝗹 𝘁𝗿𝘂𝘁𝗵:  Most brands 𝘀𝗹𝗮𝗽 𝗯𝘂𝗻𝗱𝗹𝗲𝘀 𝗼𝗻 𝗮 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗽𝗮𝗴𝗲 and expect magic.   But random pairings ≠ real revenue. 𝗪𝗵𝗮𝘁 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝘄𝗼𝗿𝗸𝘀?   → 𝗗𝗮𝘁𝗮-𝗱𝗿𝗶𝘃𝗲𝗻 𝗰𝗼𝗺𝗯𝗼𝘀: Use your purchase data to see what customers *actually* buy together.   → 𝗖𝗹𝗲𝗮𝗿 𝘃𝗮𝗹𝘂𝗲: Show the savings/upside front and center—don't hide it in fine print.   → 𝗙𝗿𝗶𝗰𝘁𝗶𝗼𝗻𝗹𝗲𝘀𝘀 𝗲𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲: One click to add the bundle, zero confusion. We rolled this out for a client.   𝗥𝗲𝘀𝘂𝗹𝘁: 77% of customers chose the bundle. Tens of thousands in extra monthly revenue—see image for the real numbers. 𝗧𝗵𝗲 𝗳𝗼𝗿𝗺𝘂𝗹𝗮:   ✅ Know what your customers want.   ✅ Make it simple.   ✅ Communicate the benefit. Bundles aren’t “set and forget”—they’re a conversion machine if you get the details right. Are you still bundling by guesswork?   Drop a “💰” if you want to see the data-led approach that works. #eCommerce #AOV #CRO #ProductStrategy

How do you determine initial pricing in an early stage startup? Jasdeep Garcha wrote about how we approached our own pricing at Schematic. Here are the key things that have guided us and that we've done👇 𝗪𝗵𝗮𝘁 𝗺𝗮𝗸𝗲𝘀 𝗶𝘁 𝗵𝗮𝗿𝗱? 1. Limited Customer Data: With a small customer base, identifying definitive trends about what customers value is difficult. 2. Lack of Comparisons: We couldn't rely on direct competitor benchmarks given our product crosses categories. 𝗛𝗼𝘄 𝗱𝗶𝗱 𝘄𝗲 𝗮𝗽𝗽𝗿𝗼𝗮𝗰𝗵? 1. Talked to customers: Conducted approximately 30 "willingness to pay" (WTP) interviews to understand perceived and relative value and fair pricing points. 2. Defined an internal philosophy: Created a set of principles that would guide our decisions. 3. Blended Decision-Making: Customer input shaped 75% of our decisions, with the remaining 25% informed by our vision of future use cases and market needs. 𝗪𝗵𝗮𝘁 𝘄𝗮𝘀 𝗼𝘂𝗿 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗽𝗵𝗶𝗹𝗼𝘀𝗼𝗽𝗵𝘆? 1. Simplicity: Simple pricing to reduce confusion and accelerate decision-making. We wanted our pricing to be as low cognitive load as possible. Frankly, we're still working on this. 2. Accessibility: Designed tiers that even small companies or hobbyists could afford. 3. Push to Evaluate: Included time-limited free access to encourage users to try the product quickly. 4. Aligned Growth: Charged customers more only as their businesses grew, reflecting value alignment. 𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗼𝘂𝘁𝗰𝗼𝗺𝗲? Tiered pricing with 4 tiers. 1. Free Tier: For hobbyists and small projects, enabling quick integrations without advanced feature needs. 2. Team Tier: Added features like multiple environments and longer retention periods for scaling startups. 3. Business Tier: Introduced event-based metering and advanced security features. 4. Enterprise Tier: Tailored to large, sophisticated needs requiring dedicated support and enhanced performance.

USPS is rolling out higher parcel delivery rates this week—another reminder that shipping costs can hit you hard when you're not looking. Why it matters: • Effective budgeting: Even small rate increases can erode margins if you’re not watching closely.   • Customer experience: Passing on costs might upset shoppers, so consider new ways to balance shipping speeds and fees.   • Contract updates: Shifting rates are a good nudge to re-check your carrier agreements and see if multi-carrier strategies or revised packaging can soften the blow. What can you do? • Dive into your shipping data to spot any patterns that might be driving costs up.   • Explore alternative carriers or shipping tiers for different regions.   • Optimize packaging to avoid dimensional upcharges.   • Keep lines of communication open with customers about potential changes in shipping fees or delivery times.  Looking ahead, parcel rates will likely keep fluctuating—prepare by building in a little flexibility and using real-time analytics to stay one step ahead. It’s not always fun to pivot, but a proactive shipping strategy helps you adapt quickly (and keep customer satisfaction intact) when carriers adjust their prices. Read more about the USPS rate changes: https://lnkd.in/gQM-GVmN #USPS #Shipping #Logistics #Ecommerce #ParcelRates #SupplyChain #BusinessInsights #ShipSmarter

❌ Out: Selling bundles as a volume discount. ✅ In: Selling comprehensive solutions to your customer's problems. Our goal is to drastically increase AOV this year. To do that, we wanted to sell more bundles, but the typical levers weren’t really moving the needle → “Add more products, get a better price.” Most brands sell “bundles” as nothing more than 3+ discounted products like this. But customers don’t want more stuff. They want a transformation. So we rebuilt everything around a simple idea: What if we sold a system instead of a discount? Inspired by the skincare world (think Proactiv), we repositioned our 3 collagen-infused fat burners like this: 🎯 Morning: Caffeinated thermogenic + collagen = kickstart metabolism 🕐 Afternoon: Stimulant-free formula = appetite + craving control 🌙 Night: Relaxation blend = fat burning while you sleep + recovery Design-wise, I am focused on 1 thing: System reinforcement from top to bottom. 📆 Timeline view: Set expectations from week 1 to 12 months ⏰ Daily schedule view: Simple AM / PM dosing routine 🧩 Problem-solution grid:Tackle slow metabolism, cravings, and poor sleep 🧪 Ingredient synergy view: Explain how compounds work together 🎨 Color-coded anchoring: pink = morning, blue = afternoon, purple = night So it’s not about more product. It’s about more CLARITY. The theory is that this will increase perceived value and conversion rates. Confession: We haven’t tested this LP design yet (ran out of inventory mid-build 😅), but I’m bullish on this direction. Would LOVE your first impressions and feedback on this direction before it goes live 👇🏽

Just had a fascinating chat with a Shopify merchant that made me rethink everything about product bundling 🤔 "We don't create bundles to increase AOV. We create them to solve customer problems." This hit different. They explained how their customers were constantly messaging support asking which products work best together. So instead of pushing random "deals", they started creating bundles based on actual customer questions: - "Which products should I use for sensitive skin?" - "What's the best starter kit for beginners?" - "What do I need for my morning routine?" Their bundle conversion rate? 3x higher than regular products. Sometimes we get so caught up in the metrics (AOV, conversion rate, revenue) that we forget the real reason we're building features: To solve real customer problems. What's a customer insight that changed how you think about your product? 👇

Everyone talks about using scarcity to close more deals. But most people either sound desperate or gimmicky. Here are 3 ways elite salespeople use scarcity (the right way): Scarcity isn't about faking limited supply. We have to create genuine value through limited access. Think about The Masters golf tournament. They sell millions in merchandise you can ONLY buy during the event. No online shopping. No exceptions. Why does this work? Because earned scarcity creates belonging. That Masters hat isn't just headwear. It proves you were THERE. It tells a story about you. It creates identity. Elite salespeople use this psychology in three powerful ways: 1. Time-Based Exclusivity Create "now or never" opportunities that actually deliver unique value. Offer special bonuses ONLY to live webinar attendees. The key is that the opportunity needs to truly disappear. I've used this with clients by offering limited-time strategy guides that we later remove. People who acted quickly got them. Those who waited missed out. 2. Finding Uniqueness Within Abundance Even with plenty of inventory, highlight what makes each option irreplaceable. The best home salespeople never say, "we have 30 homes available." Instead: "This is our only corner lot with southern exposure." "You're looking at the last floorplan with the expanded kitchen option." They create scarcity through uniqueness. I coached a sales team with 1,000+ inventory homes who transformed results by highlighting: • Location specifics • Community features • Sight lines and views • Proximity advantages 3. The "Pencil-In" Close Once your prospect is almost sold, offer to "pencil in" their next available slot: "We only onboard new clients on Tuesdays and Thursdays..." "This Thursday is already booked. I could pencil you in for next Tuesday to hold your spot while we finalize details." This creates legitimate urgency without pressure. The real magic with scarcity happens when you adjust based on who you're selling to: • Boomers need certainty in scarcity messaging • Gen X wants quality-focused scarcity • Millennials respond to sustainability-based exclusivity But we have to understand that the goal isn't tricking people into buying faster. We're helping them discover the actual value of acting now versus later. When done right, scarcity creates clarification. It helps customers see what they'd truly miss by waiting. Stop using fake urgency tactics that destroy trust. Start creating real value that drives decisions. It's a battle plan to: • Close deals faster • Shatter mental blocks • Crush objections without blinking No recycled junk. Just real-world tactics that transform sales pros into absolute Sales Warriors.