Broadcast License Pricing For A Daily News Show

k.l.

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JoyceKetterer

@karstenluecke @Ben Blom  you can view my complete web and application embedding pricing tables here.  All "print" uses (including static web display) are permitted under our basic license - for which the pricing is based on the number of styles (or families in the case of superfamilies) and CPUs.  For a group license without counting CPUs we still use the CPU pricing as starting point and add a mark-up for growth of 35%.  

For less common types of licensing, I either have pre-made pricing or a I can calculate it using existing tables as a starting point and make modifications as needed.  

Ben Blom

Because “tariff” may not be a good term to use in this context, I will use “rate” instead from now on. A “rate” is what one decides to be the price or value per unit of something [or the price or value of some quantity of something]. So, “Total price = <units> x <rate>” or “Total price = <quantity> x <rate>” or “Total price = <quantity> x <price of this quantity>”.

Suppose one sells widgets. Say, for 1 to 10 widgets, the price per unit is 10; and for 11 to 50 widgets, the price per unit is 9. If one sells 4 widgets, the total price is 4 x 10 = 40. If one sells 20 widgets, the total price is 20 x 9 = 180.

The logic of “Total price = <quantity> x <rate>”, is identical to the logic of “Total price = <base price> x <multiplication factor>” that I discussed earlier. The “rate” or “multiplication factor”, is the price of a quantity.

The “base price” doesn’t look like a “quantity” at first sight—but in a way, it is. It is actually the price of a quantity. If, for example, the base price is the price of the smallest desktop license for the fonts involved, then that base price is dependent on a quantity. The base price may be the price of a single font, of four fonts, or of a complete font family. So, the base price is the price of some quantity of fonts.

Example. When there are three size ranges, “below A”, “between A and B”, and “above B”—then there will be a different price (rate, multiplication factor) for each of those ranges. When only differentiating between a single font, four fonts, and a complete font family, the following table is an example of different rates:

 

The rates I use for “big deals”, are based on educated guessing. Now I will—especially for Joyce—reword the question I asked at the end of my previous post.

Joyce, the pricing table of your “App Addendum”, has exactly the same logic as the table above: Different columns for a different number of font styles, and different rows for different user size ranges. Now I wonder, for the bigger size ranges (i.e. at the bottom of your table): Are those prices based on a calculation, an educated guess, and/or on something else?

Joyce, in the pricing info about your “Distribution Addendum”, it says: “Pricing for distribution addenda is four times that of the same number of styles and CPUs for a basic license”. Now I wonder: Is this multiplication factor “four”, based on a calculation, an educated guess, and/or on something else?

 

In the article [www.inc.com/guides/price-your-services.html] “How to Price Business Services”, three different ways are described to determine the price of what one sells: “Cost-plus pricing”, “Competitors’ pricing”, and “Perceived value to the customer”.

• When thinking about selling fonts that are already sitting quite some time on the shelf, I believe there is no clear relationship between everything that goes into creating such a font, and the price to ask for a “big deal” with such a font—so then a “Cost-plus pricing” approach does not make sense.
• It makes sense to factor in competitors’ pricing, but the usefulness of that is limited, because (1) your font may not be a real substitute for comparable fonts from other sellers, and (2) the market is non-transparent for “big deals”: you don’t know what the price is of most other sellers for such deals, and you don’t know what “package” the “big deals” of other sellers exactly consist of.
• The “big deals” pricing that I discussed earlier, is primarily based on “Perceived value to the customer”.

For a story about deciding what a fair price is of something you sell, see here: [www.inc.com/magazine/20010401/22307.html].

JoyceKetterer

@Ben Blom I'm  not sure I understand the purpose of your questions and I don't want to get lost in the weeds of a tangent.  Suffice to say that our pricing always functions as a system and has foundational logic from which we can extrapolate if we need to invent something new. In all cases the equations either function infinitely or there's a point at which we stop counting which we call "unlimited".

Ben Blom

I think that sometimes, educated guessing is just unavoidable. My questions were meant to illustrate that. Having a pricing table for an “App Addendum” specifying a price of $54,000 for unlimited use for one year for 6 styles, doesn’t explain why it is that amount—and not, for instance, $44,000 or $64,000. Having a multiplication factor for a “Distribution Addendum” of 4, doesn’t explain why it is that factor—and not, for instance, 3 or 5. A suggestion that all such prices or multiplication factors, can be calculated in some way, or can be decided in some ‘objective’ way, or are completely based on some measurement, is misleading to me.

JoyceKetterer

@Ben Blom  I think we just have a totally different idea about what the term "educated guess means."  Sure, I've not carefully calculated the unit price for each price point but that's the charm of designing a logical system - it wasn't necessary.  

The examples you give aren't arbitrary in any way.  The price of 54k works perfectly within the complete system of pricing in that table.  I made the table by first determining what I thought the tiers should be based on a combination of my own experience and a review of other tiers from well know font licensors.  I then decided what I wanted to be the lowest and highest prices, then I made all the other prices work as logical steps.  That's how I do everything and why I get into very few arguments with customers about whether my pricing is fair.  This is what I mean by showing my work.  

The same is true for a distribution addendum.  We designed that addendum so that it would be useful for large clients who hire contractors for short projects.  We wanted it to be a savings for them but the addendum is a fair amount of maintenance from us so we want to discourage customers who don't really need it. 

I've never said pricing should be "objective".  I've said it shouldn't feel arbitrary in order to build trust with customers.  Pricing can be subjective without being arbitrary.  For that matter, it can be objective but feel arbitrary and the feeling would be the only thing that matters.  The opposite of arbitrary is consistent, my systems achieve consistency.  

Ben Blom

Joyce, on a fundamental level, your approach is not unlike my approach—except for the “big deals”.

According to www.macmillandictionary.com, “arbitrary” has the following two meanings: (1) not based on any particular plan, or not done for any particular reason; (2) used about actions that are considered to be unfair.

I do agree that, in general, consistency is a good thing—although consistency does not rule out arbitrariness in the sense of being unfair. (It does rule out arbitrariness in the sense of not adhering to a system.) So, something that is systematic, is not automatically fair.

JoyceKetterer: “I then decided what I wanted to be the lowest and highest prices, then I made all the other prices work as logical steps. That’s how I do everything and why I get into very few arguments with customers about whether my pricing is fair.”

I do agree that in the context of a pricing table, calculating individual prices (between the lowest and highest prices) is not needed when the idea is to have a “logical relationship” between the prices in the table. I also believe that it is possible to decide what the prices should be at the top of the table (i.e. the lowest prices for the lowest user size range), because it is possible to find out what kind of pricing is common in the market for such licensing.

But what about the bottom of the table (i.e. the highest user size range)? How to decide what the highest prices should be? Can those highest prices be calculated, when only the corresponding lowest price is known? Is there a logical step to derive a highest price from its corresponding lowest price? I don’t think so. I believe that the “logic of the table” doesn’t help to decide what the prices for the highest user size range should be. So, for instance, the “logic of the table” doesn’t help to decide whether a highest price should be $44,000, $54,000, $64,000, or another amount.

Also, for the highest user size range (the “big deals”), I believe that it makes sense to decide about the price on a case by case basis—as far as such cases are dissimilar. For me, the highest user size range is the “educated guessing territory”.

In my opinion, by itself, a consistent pricing system does not automatically produce a fair price for the highest user size range (although a pricing table with a consistent pricing system, is a great instrument to ‘sell’ such a highest price to a potential customer).

JoyceKetterer

@Ben Blom  To be clear, what I've been trying to say all along is that the part where we disagree is about how to approach the big deals.  Further clarity, I very frequently entertain a negotiation on my posted prices.  This happens most frequently with complicated licenses (both large and small scale complicated use cases).  And yes, my ultimate price might work out to be, as you say, a bit haphazard.  

I never said it wasn't or shouldn't be.  All I have been advocating for here is clarity of message about how pricing tables are created to avoid a complete lack of trust.

This all started with someone saying that a high price might result in a customer asking to see proof you've charged that price before.  I believe that such a request signals that the customer doesn't trust the prices, and therefore I suggested my solution for building trust.

With regards to deciding where what the highest price should be, I just disagree.  It was very easy for me, based on more than a decade of experience, to figure it out for each granular type of licensing.  When it comes to a license where all things are included, I have a method for suggesting bulk discounts.