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Apr 28, 2021

Pricing metrics really should be correlated with your customer's value metrics.

First off, what's a pricing metric?

A pricing metric is what you charge for. If you're, you are charged by the person.

If you're Dropbox, you might charge by the terabyte of storage. You might charge by the click, you might charge by the view or the exposure. There are lots of things we can choose to charge by, you have to make a decision, what are you going to charge for? That's your pricing metric.  

“The best pricing metrics are highly correlated with users’ value metrics. ” - Mark Stiving  

Well, how do you make that decision? One really important thing to think about is, is it correlated with your customers value metric? A value metric then, is how does your customer measure the value of your product. 

I like to play a little game with my clients and I say, "Fill in the following blanks. My customers love me because they're blank went from blank to blank." That could be their turnover went from 8% to 6%. That could be their productivity went from 1000 units per hour to 1200 units per hour. There's some metric they're using that they're saying, "Hey, when we use your product, it really helps us in this area, and here's how we measure that."  

The great thing about having a pricing metric that somehow highly correlated with our buyers value metric is as our buyers get more and more value, we end up getting paid more, and our buyers don't mind because they're getting all that value.  

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