We live in a time of abundant choice, and our customers expect options. Providing customers with a large variety of products and features is a compelling way to sell more. But, as companies grow and diversify, it can be difficult to capture the monetary value generated by the long tail of these products using traditional product management tools and data. An example of these traditional methods includes simple gross margin and product costing techniques derived from accounting systems. These conventional accounting data sets fail to account for the value of diversification and the actual cost of complexity.
I recently read an article about new pricing models in the digital era. A few of the key pricing models mentioned included tiered offerings, fixed fees, and subscriptions. I’m sorry to say, these pricing models are not new. However, the nuance they illustrated around metrics is worth noting because, thanks to advances in technology, new metrics have become available that allow companies to measure engagement in ways that were not possible 10 years ago, resulting in metrics that better align with customer value.