HACKER Q&A
📣 DoreenMichele

How to determine what to charge for and how much to charge?


If you do something established, it may be relatively easy to look up standard prices and extrapolate from there what to charge.

But if you do something innovative, how do you determine:

1. What parts of your service to charge for?

2. How much to charge?

All businesses do some things for free. But in order to have a business, you have to make money. How do you work out the details of what parts of what you do justify charging X so the rest of it makes sense -- especially if you are doing something different that you can't (readily) find examples of anywhere?

Edit: Just to be clear, I am not a programmer. That is not the business space I am looking to develop.

Don't let that stop you from using programming examples, but I'm in a different career field. Though I do have a Certificate in GIS and I am trying to do something GIS-related (at least map related as part of it) and 100 percent online that I don't think is normally done remotely, among other innovations.


  👤 tallgiraffe Accepted Answer ✓
Charge by the ability to pay, based on your value proposition.

For example, if your service or product can help the customer save $10k/month for the next three years, that's 360k that you will be saving them. It doesn't make sense to charge them $200 for it, but maybe 30% of the net savings can do it, so $100k!

On the other hand, if for 100k they can hire a FT developer to do what you do, plus 10 other features, then charge less so they pick you over the other option.

From the personal experience, I would say avoid building products where you sell something for very little, unless you can get lock-in and your customer's lifetime value is pretty large. So if you offer a $10/m service, and your customer leaves in 3 months, that's a lot of work. But, if they stay for next 10 years, and you can find 10 million customers like them, then it's worth it (hey Dropbox!).