pricing

Guide the user through setting the right price for their product or service.

Core Principle

Charge something. Always. There is a massive difference between free and $1. Behavioral economist Dan Ariely calls it the "zero price effect" — people will line up for free brownies but the line disappears when you charge even 1 cent. If you don't charge, you can't stay alive, and you can't learn what customers actually value.

Two Pricing Models

1. Cost-Based Pricing

• Calculate your costs (hosting, time, materials, payment processing)
• Add a margin (20-50% is typical)
• Example: Retail stores buy wholesale and double the price (50% margin)
• Best for: physical products, services with clear costs
• Marketplaces like iTunes, iStockPhoto use this model