Review: Don’t just roll the dice by Neil Davidson

Software pricing is one of the most difficult things to get right. One of the first pieces of advice I got from a serial entrepreneur was ‘take a price, and then add two zeroes to the end of it before telling your customers.’ – It seems at times to be as much an art as a science.

That being said, there is useful advice out there, and Don’t Just Roll the Dice by Neil Davidson is a good place to start.

As it says on the cover its “usefully short” – there’s no nonsense here which is nice. It starts with the briefest of introductions to economics, before moving into the interesting area of pricing psychology. The discussion on perceived value is crucial for anyone involved in pricing.  I’d recommend supplementing the reading of that chapter by watching this fascinating TED video: Rory Sutherland: Life lessons from an ad man – which delves into the notion of perceived value.

Another interesting aspect of the book was the concept of fairness:

However you price your product, remember that consumers have an acute, although often irrational, sense of fairness. Think twice before you betray that.

I think this is an often overlooked fact by people setting prices, but it’s something we encounter all the time in every day life. Even if something is expensive, if it can satisfy the ‘fair’ criteria, then it’s ok to pay the premium.

Since Notion Learning is going with a SaaS platform and subscription payment model, the section on versioning in chapter 4 was very relevant. The section doesn’t go into ridiculous detail on user segmentation, but it does point out some really neat things you may not have thought about, such as adding choices to a versioned price plan having two opposite effects depending on how easy it is for people to compare the different versions.

Don’t just roll the dice is a great introduction to a difficult area. Read it, then price away.

Page for Don’t just roll the dice at NeilDavidson.com, where you can download a free e-book or follow links to buy on amazon.

Tags: Book review, Neil Davidson, Pricing, SaaS, Versioning

This entry was posted on Wednesday, December 2nd, 2009 at 5:14 pm and is filed under Business development. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.