Pricing should never get you stuck, and though there are many approaches to pricing your business, I find the approach of less for less to be easier than others. At the end of the day, your support or sales staff needs to be able to sell the product and justify its virtue.
When pricing Mad Mimi, I needed to provide a compelling alternative to the dominant companies offering email marketing (Constant Contact, MailChimp, ExactTarget). This strategy of less for less not only succeeded in capturing a material segment of the email marketing space, but allowed my (at the time, small and scrappy) business to thrive with the bootstrapped resources I had available.
Here are a few general approaches to pricing:
Charging more and providing less
This approach can work if the product has a strong culture or a super-sticky design, but this is a branding and messaging tactic. It’s powerful but if not done right, this approach can expose sales staff to a troublesome sales lyrics and lack of conviction in your (high) price vs. (lesser) value vs. (lower-priced) competitors.
Charging less and providing more
I’m always suspicious that a compromise in quality for feature-richness is unavoidable with this model. Also, I don’t even know if I want more. I may just want easier or more elegant or more approachable. You don’t need to provide more and charge less to woo me. You can provide more and charge more, or provide less and charge less, but I don’t see the value in charging less and providing more unless you’re a utility company.
Justifying less for less
You may have convinced yourself: but my customers be unhappy with less features than competitors. I know how important a “search” feature is, and without that search feature, customers won’t be able to… search. Here’s the litmus-test for this concern: if the customer has that function accessible somewhere — anywhere — through a different service or context even if it’s painful, then that’s what they’ll do. They may request that feature and you may want to respond later, but they’ll like you for your minimalism and simplicity. It’s a healthy tradeoff.
Why not spin it?
Spinning a scant feature-set into a winning formula is imperative. If you perceive your scant functionality as a shortcoming, you’re working against yourself. So get you your simple, only-what-you-need-nothing-you-don’t boots on and kick sand in your bulky, oversized nemesis’ eyes. Be sure to accompany your gesture with the ability to provide an impassioned and empathetic and personal experience.
Hint: big companies have a hard time being empathetic, impassioned and personal. They have a hard time with “surprise and delight” too. You may have seem less to offer, but simplicity and empathy are important to enough people to give you enough runway to build yourself up over time as you mature.