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Disruptive & Innovative Pricing Models Master Thread

Discussion in 'Business Models, Niches, Industries' started by Lex DeVille, Jun 11, 2018.

  1. Lex DeVille
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    Lex DeVille The moments that define you have already happened. Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    PRICING MODELS MASTER THREAD

    I searched for a list like this the other day. Google returned a scattered mix of results. Didn't find one here either. So I thought it might be useful to list different pricing models into a single place.

    Please Note: There are other threads for pricing strategy and Psychology. Like this one, this one, and this one. This thread is NOT that. This thread is for pricing models. Share your best or most creative ideas. Here are some to start:


    Hourly
    Customer pays by the hour for the work you do.
    ($100 per hour)


    Upfront Pre-Service
    Customer pays a fixed price up front before receiving the product or service.
    ($1 for Starbucks Latte)


    Upfront Post-Service
    Customer knows price, but does not pay until they have received the product or service.
    ($1,000 if we win your case)


    50/50
    Customer pays an amount upfront and another amount after job is completed.
    ($500 to start and $500 upon completion)


    Estimation
    Business provides cost estimation subject to change based on the actual work completed.
    (Estimation $100 but $150 of work was required so total is $150)


    Value-Based
    Business decides what it’s worth to do a job based on the value they provide.
    ($10,000 to have ME solve this problem for you)


    Subscription
    Customer pays a set amount each day, week, month, year etc.
    (Netflix costs $8.99 per month)


    Commission
    Customer pays a set amount based on the total price of a product or service.
    (Total sales 10,000 with 20% commission = $2,000)


    License
    Customer pays a fixed amount to purchase a license to use/reuse a product.
    ($70 to buy an individual license. $100 to buy a developer license)


    Pay Per Lead
    Customer pays for each lead they receive whether they close the sale or not.
    ($100 for 10 confirmed leads)


    Pay Per Use
    Customer pays each time they use a product or service.
    ($0.10 per search)


    Per Users
    Customer pays based on the number of users for their account.
    ($100 for every 1000 email subscribers)


    Revenue Share
    Business shares a percentage of revenue with you in exchange for a product or service.
    (If they make a $100 sale, you might get $50 of that if it’s 50/50 split)


    Freemium
    Customer pays nothing for initial service with hopes they’ll buy other stuff later on.
    (In Fortnite the game is free, but upgrades cost money.)


    Per Click
    Business pays each time a potential customer clicks a specific link.
    ($0.10 per click)


    Per Word
    A set amount per word typed.
    ($0.10 per word)


    Per Page
    A fixed amount per written page.
    ($100 per page)


    Per Email
    A fixed amount per written email.
    ($100 per email)


    Word Retainer
    A fixed amount of cost for up to a fixed amount of words.
    ($1000 for up to 10,000 words)


    Monthly Retainer
    A fixed amount of cost for ongoing services monthly.
    ($1000 per month)


    Milestone
    Customer pays at set intervals (milestones) of a project.
    ($50 now, $50 at phase 2, and $50 at completion)

    Payment Plan
    Customer accepts an up front cost but extends it over a set number of installments often with interest or added cost.
    (Price = $2500 or just 3 monthly installments of $1000 [20% increase])


    Consider this a jumping off point for the topic. I've overlooked many ideas (that's why I was searching in the first place), so feel free to add your own. Especially unique, creative, disruptive, or innovative concepts, or even just traditional models that still work really well.

    Conversation Questions:
    What pricing models have you seen or used?
    What industry did they work well for?
    What other industries could they apply to?

    Also feel free to expand on any of the models listed above. For instance, I listed "subscription" but there are many variations of subscription models. How would you use this or others to gain a competitive advantage in your market?
     
  2. Lex DeVille
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    Lex DeVille The moments that define you have already happened. Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Writing Industry

    For this industry I've used the following models:

    Hourly
    Good for when you don't know the value of your efforts. Can be scaled quickly to $100/hr or more to create a 6-figure income. You are limited by the hours available in any given day. You are also limited by the number of clients you can personally work with unless you outsource the work.

    Pay Per Word
    Good for competing for low-budget jobs, or when you really want to confuse a client. Most people can't quickly calculate a price per word in their head, so I almost never price writing by the character or word because it makes things harder.

    Monthly Retainer
    Good for when you want to secure monthly recurring revenue, though you'll need a contract in place or some clients will ditch after a month or two. Can be used with high or low prices. In the past I would do something like $1,000 for up to $10,000 words. You have to be careful with the amount of work you'll do on retainers like this so you don't overwhelm yourself.

    Pay Per Page
    This is my favorite model, though it doesn't create recurring revenue. With pay per page I charge anywhere between $100 to $300 or more for each page / email / blog etc. Usually I add an additional restriction to the number of words per page (I set mine up to 500) so I separate my time from my pay a bit more. Also I like that this is paid up front and it's disruptive when compared to other writers charging .05 cents per word.

    Pay Per Booking
    This can be a great option if you're a copywriter. Some clients want to give a commission on sales, but sales often require the client to succeed on the call. As a writer you can't control how good they are at sales calls, so it makes sense to get paid for getting calls booked instead of their ability to close sales.

    Pay Per Conversion
    If the client's sales model doesn't involve talking on the phone (thinking ecommerce) then a commission on sales might be a good choice for you. If you write an email that generates 10 sales at $500, then that's $5,000. If you get a 20% commission on that, then you earned $1,000. Most clients won't pay you anything up front with a model like this.

    ---
    This I haven't tested with any clients.

    Royalty
    As an ebook ghostwriter you get paid up front (usually $150 - $300). But you could also work with your client on a royalty option. In most cases it might not be very lucrative for you, but if the book takes off, you could enjoy a high return, and it could be recurring.
     
    Last edited: Jun 11, 2018
  3. The_Saphir
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    The_Saphir Deo Volente Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Lex, this is a wonderful & very useful thread. Thanks!
     
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  4. Andy Black
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    Andy Black Any colour, as long as it's red. Staff Member Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Free
    Make the service or product free (or almost free) and make money some other way (as detailed in the book "Free" by Chris Anderson).


    Flat-Rate Tiers Based on Spend
    Used a lot by digital marketing agencies.
    (€500 fee for spend up to €2k/mth, €750 fee for spend up to €5k/mth, etc)
     
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  5. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Consignment

    Paying the supplier of goods after the goods have been sold.

    Mostly used in consignment shops/car lots and the like, but also common in wholesale CPG's. Often used in conjunction with a minimum sales threshold before payment is required.

    (For example: they start paying supplier after 20 units are sold, then payment by period or unit turnover count thereafter)

    I've used this to get "on the fence" retailers to say yes.

    "No money up front, pay as you sell. If nothing sells, I come pick up my product and life goes on."
     
  6. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Buyback Contracts

    Supplier buys back unsold goods after a certain agreed upon time. (end of season, month, product expiration, year, etc)

    The buyback can be in the form of cash or account credit for the following period.

    I've used this to sway seasonal retailers in my favor, as having product left at the end of summer is a huge concern.
     

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