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Showing posts from January, 2009

What's Wrong with Product Management?

Over at the On Product Management blog, Saeed asks us to complete a brief survey on what the biggest problems are in technology product management. I answered roughly as follows: Q1. What do you see as the biggest problems facing the technology product management profession today? Too much tactical activity in the absence of sound strategy. The lack at most companies of a skilled interaction designer or user experience professional role. Q2. What solutions would you suggest to address these problems? Educate executives about the importance of strategy and how to best determine it. Hire skilled interaction designers or user experience professionals. Q3. Which of the following best describes your role/department? Product Management

Value-Based versus Cost-Based Pricing

Over on the Accidental Product Manager blog , Dr. Jim Anderson writes that cost-based pricing of a product is a bad idea, and that value-based pricing is the way to go. Cost-based pricing and value-based pricing are two different ways a product manager can decide on the price of a product. A cost-based price is the cost of producing a unit of the product plus a certain margin. For one example of applying cost-based pricing, see Adam Bullied's blog entry on the pricing new products . A value-based price reflects the value of the product to the customer. The way I suggest pricing a product based on value is to use negative pricing . Dr. Anderson points out that price and volume have mutual feedback effects: Since your unit cost is changing with volume, your price will determine how much you sell. This will then impact volume which then impacts unit cost. As a result: So what’s wrong with cost plus pricing? Simple - cost plus pricing will cause you to over-price your

Two Approaches

Back in November, Seth Godin wrote about a frustrating experience almost all of us have shared. You call customer service, navigate a long sequence of touch-tone prompts, only to be informed that the office is closed. In Godin's case, he endured nine prompts. If a typical product manager or business analyst presided over the development of this telephone navigation system, I can imagine how it went. "Let me talk to your subject matter experts (SMEs) ." "What are the departments a customer might need to contact?" "Let's draw a chart showing the different paths through the phone system." Contrast this approach with the following focus on real requirements . The product manager or business analyst converses with customers and customer support to understand the problems that they are trying to solve and avoid by calling support. The problems don't just include the reason they call support in the first place. They also include potential p