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I think you missing the point. As you say there is no way to know for sure what the ‘correct’ price is for your product. One customer may be willing to pay $X and another $5X for the same features, but you need to find the number that maximises your profits across your whole customer base. As such most companies effectively just pluck a number out of the air and see what works.

Patio11’s argument is that most companies are charging a safe number that works, however that number is too low. By charging more, yes you will scare away some customers, but the customers who are concerned about price aren’t the customers you want.

In your case, say you cloned something like SendGrid and charged half the price. Their big customers like Airbnb or Uber effectively don’t care how much an email costs to send, they just want to guarantee that it is sent. So if you manage to score a customer like that, you are leaving a lot of money on the table.

On the other hand, the customers that do care about price are likely going to be lower quality, maybe they are sending bulk newsletters which if marked as spam will damage your company (as your IPs will end up on blacklists) - meaning more work, and more cost, cleaning up their mess.




Yes there is a way of knowing what is the correct price and it is the one that maximises your NPV. The fact that many times companies charge too little does not change the fact that there is an optimal price. It is not found by just increasing your prices. You need to treat pricing like the hard problem it is.

I tend to think the mantra of charging more has gotten a little too popular and I suspect that many companies are now charging too much.

The big customers like Airbnb and Uber very much care how much it costs to send emails. The most price sensitive customers are the largest and they will try to screw you down on price much harder than smaller customers. When you are sending a billion emails the price per email is much more important than if you are sending a hundred.

Taking your example, there is no reason to think that charging less would result in more spammers using your service provided that you maintained equivalent quality controls. Spammers are probably the least price sensitive mass email customers as they are professionals who are most concerned about deliverability and ROI.




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