Tuesday, July 24, 2007

Buying Features

One of Luke Hohmann's great innovation games is "Buy a Feature":
Create a list of potential features and provide each with a price. Just like for a real product, the price can be based on development costs, customer value, or something else. Although the price can be the actual cost you intend to charge for the feature, this is usually not required. Customers buy features that they want in the next release of your product using play money you give them. Make certain that some features are priced high enough that no one customer can buy them. Encourage customers to pool their money to buy especially important and/or expensive features. This will help motivate negotiations between customers as to which features are most important. This game works best with four to seven customers in a group, so that you can create more opportunities for customers to pool their money through negotiating.
A nice consequence of using this approach is that it gets customers away from the mentality that features come for free. They must prioritize and balance the value of features versus development costs.

If you haven't checked out Luke's book, Innovation Games, I definitely recommend it.

Nonetheless, in my next post, I will discuss an important limitation of this approach and propose a variation that addresses the limitation.

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