The complex problem you and most businesses face — pricing (part 3)

Byrne Hobart has a problem — but it’s almost manageable now!

He writes The Diff on Substack — all about inflections in finance and tech. He has a free newsletter and a paid subscription for $220 a year or $20 each month. He often writes five articles a week.

Byrne’s read by hedge fund managers, tech company founders, venture capitalists — and billionaires.

His problem? It’s one faced by many — in fact, anyone who sells a product. How to price.

Price too low and you can’t make a living — but price too high and lose your customers.

It’s a complex problem. One that we pulled apart in the previous posts with UEAR. Unhide requirements, Expose assumptions, Add limitations, and Respect constraints.

We’d just exposed both assumptions.

The first, that the single price for the lowest common denominator really assumes that all Byrne’s customers are the same — but they’re not! Some can pay a lot more than you or I — especially the billionaires. The second assumption is that The Diff should have only one price.

But many products have different prices when only small parts are different.

After all, a pro-plan on ConvertKit costs more, but it’s still ConvertKit. So now we’ve exposed the assumptions we need to follow the rest of UEAR. We need to add limitations and respect Byrne’s constraints.

Let’s start with the constraints.

He’s a prolific writer, but he’s still one man. So creating a new newsletter is probably too much. His constraint is his time — and it’s already maxed out.

So let’s add a limitation that we need to combine both of the assumptions we’ve identified and we can’t create anything new.

If we looked at Byrne’s customers by their ability to pay, and created different tiers of The Diff, what would happen? We could have a premium product for the billionaires — say early access to each article. And we could have an honour system for the corporate accounts — no difference in product, but just because the company is footing the bill.

Once you start using UEAR, all sorts of solutions occur.

Of course, there might be other hidden requirements — there are many other aspects to pricing. Or Byrne might not want to leave Substack, where each newsletter is a single product with a single price. However, a choice is not really a constraint — it’s a limitation.

And we can pull apart that choice with UEAR as well.