Monetizing Innovation

Chapter 7Go beyond the Price PointFive Powerful Monetization Models

So you've taken our advice in Chapter 6 and determined the right set of features to incorporate in your new product or service offering. You've also decided whether to combine it with other offerings. You know which of your features are leaders, fillers, and killers, as well as what product configurations or bundles to sell.

The next step is coming up with a monetization model. What is that? In a nutshell, it's how the customer pays for your new product or service.

This is no small matter. In fact, establishing a favorable monetization model can be as important as the new product itself and the price you charge for it. A highly innovative monetization model can make a new offering take off like a rocket.

A number of innovative—yet proven—monetization models are in use today: subscription, dynamic pricing, and freemium to name just a few. You need to choose one carefully; the right model can make or break your new product, your business, or even an entire industry. How you charge trumps what you charge.

That's a bold statement. Don't believe it? Read on.

How You Charge Trumps What You Charge

The first thing to realize is that most companies perpetuate the monetization model they've always used. They select a model without reflecting on it, thinking strategically about it, or testing it. That's a missed opportunity and a huge mistake.

Some of the world's most successful companies have made the biggest leaps by ...