Ask HN: Pricing strategies in a small niche market
I want to second leesalminen.<p>Do the analysis and figure out where there is a lot of value to add, then ask for that value in your pricing.<p>To be frank, say you make a &quot;me too&quot; product.  Not that I&#x27;m implying that is your intent.  I&#x27;m not.<p>You could roll it out, cut the better product pricing by some amount, promote, and score some revenue.  The expectations on this may well result in a race to the bottom, though it could also fund you making some real improvements too.  However, your better competitor will likely respond and you&#x27;ve got an arms race where your first move would be just to cut cost.<p>IMHO, adding more value is a harder sell, but when you are successful, you have a lot of room to move, and this is very likely to fund keeping the momentum up.  Start out ahead, and the other guy is playing catch up, with market expectations moving up on price &#x2F; value, not down.<p>You might also, while talking to those people about what would make for a better product, find out what &quot;better&quot; means to them, and price on some fraction of that value added.<p>Things are worth what people will pay for them, and a high value perception often means more dollars.  Further, setting that expectation means generally higher margins and maybe you don&#x27;t have a corner on the market.  That&#x27;s fine.  You will be earning your keep very comfortably.<p>Look at Apple and it&#x27;s smartphone profit &#x2F; market share, and then Samsung and it&#x27;s profit &#x2F; market share.<p>IMHO, doing the work to establish a clear, high value proposition early on has many advantages over a more streamlined, &quot;hey we are cheaper&quot; approach.<p>In this case, given the better product is backed by someone well liked and who gives great service means the market is very likely open to the high value per dollar proposition, and a discount or maybe just aggressive price to gain entry might not be seen as a favorable thing.  Or, you may find this &quot;A&quot; person has those connections somehow, or has found some of the market will pay more, or is more profitable.  The &quot;B&quot; competitor may do more deals, but might just not make anywhere near the revenue.<p>Find this out.<p>Given the connections in play, a high value &#x2F; dollar play is likely going to require some real sales effort, and the numbers you put out here are doable by an aggressive person, and that&#x27;s all fine.  Get the value add done, and it will be something to sell.<p>Finally, it&#x27;s awful hard to bring pricing up.  It&#x27;s a lot easier to either bring it down, or bundle more to maintain value &#x2F; dollar in the eyes of the users.<p>Start aggressive and high value.  You can always take a different path should you find it&#x27;s just not going to make sense.  This also leaves the door open for tiers.  Adding higher price tiers to what is seen as a lower price offering has different dynamics than adding lower price tiers to a high value &#x2F; price offering does.<p>Your discussions on &quot;what is worth what?&quot; with the market should help you understand which of those dynamics makes more sense.