Once upon a time there was a product called Wolf Maps, and it needed a price tag.
You may know The Price Is Right, the hugely successful American TV show where contestants guess product prices.
The format spread to more than 50 countries. It even aired in the Netherlands.
For some customers, EUR200 per map per month is fine. For others, EUR20 is too much.
Put yourself in a contestant’s shoes. You see an air fryer and guess EUR63. Maybe you are right, maybe not. How do you decide? You think about production costs, willingness to pay, and competitor pricing.
Now replace that air fryer with Wolf Maps, and you understand where we are today.
What should you charge for your product?
Let us answer those same three questions for Wolf Maps.
We split this into fixed and variable costs.
Fixed costs are mostly the same regardless of sales volume. For us: people (Aljan, Tim, and external services), equipment, and overhead.
Variable costs are tied to each sale: server costs, sales, and customer support.
So what does building Wolf Maps cost? Fixed costs are high. Too high to fully pass on right now. Variable costs are relatively low because Wolf Maps is digital.
Like many digital products, we need volume.
That means enough sales at a price that at least covers variable costs. Everything above that helps cover fixed costs. Lower prices require more volume.
But what is the right price? That brings us to question two.
This is value-based pricing. We do not start with our costs; we start with the value customers get.
Willingness to pay differs dramatically per customer.
For some, EUR200 per map per month is fine. For others, EUR20 is too much. Some dislike monthly fees but are fine with a one-time fee for five years. How do we handle that?
For now: segment and experiment. We have already changed direction multiple times, for example pricing based on:
A model we use for inspiration is the concert model. Imagine a Britney Spears concert:
The lesson for Wolf Maps: 80% needs a strong core product at a fair price. 20% wants extra value and will pay for specific features. The same logic applies to the final 1%.
With which price should we start? Maybe competitor pricing helps.
Everything. From expensive custom solutions to low-cost standard products. Useful insight, but limited.
What did we try?
We launched with two plans: EUR59 and EUR199 per month. We published those prices and saw sign-ups drop significantly. We took them down again. Since then, we keep experimenting with both price level and what is included.
We understand our product value better than before, but we have not fully found the sweet spot yet. We keep iterating until The Price Is Right.
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