The OpenAI team is currently researching how to build a pricing model for ChatGPT. Let’s break down their research effort.
I want to talk about the questions they’re asking related to pricing and how it might help you perform research for figuring out how to best price your product.
Survey – https://docs.google.com/forms/d/e/1FAIpQLScwuQEWBkxsNftEkvUgFx2Ov7pKcrOx8IUlZ241lvet7ziXCQ/viewform
Article – https://www.techradar.com/news/chatgpt-could-soon-start-charging-you-for-its-ai-skills
For lessons like these by email, sign up at https://nxtstep.io/learn
Hey, folks, Sean here.
And today what I want to talk to you
about is that OpenAI is actively doing research, trying
to figure out how to monetize ChatGPT.
And I want to talk to you about the research
that they’re doing, some of the details of it, and
what we can learn from it to help you figuring
out how to design pricing for your product.
Now, I don’t know about you, but I’ve
heard some really impressive use cases that people
have come up with in getting very creative
with how to leverage this technology.
Terms of generating a ton of value.
I’ve heard of everything from people leveraging Chat GPT
to write code, all the way to creating poetry
and writing books and everything in between.
It’s pretty wild.
In fact, one of the most interesting things for me
about all of this so far is outside the technology,
hearing about the use cases and how people get really
creative in figuring out how to generate value.
Now, the common theme in terms of what I’ve
been paying particularly close attention to, in terms of
what people are figuring out what to do with
this technology, is how much value it’s generating.
When I say value, what I mean
is it’s providing them time back.
It’s helping them become more efficient or generate even more
effective results in terms of I can start to quantify
some of this, which helps me get closer to this
concept that I talk about a lot as well, too.
In ROI or return on investment, as in
for the customer, they’re receiving time back.
If they’re getting more value, we can start
to figure out how to quantify that.
And if we’ve got a better understanding in terms of
what type of return on investment they’re getting, that can
end up being a direct line for us to figure
out where the product should appropriately be priced.
As in you want to make sure you’re
not charging too little and leaving a bunch
of money on the table because you’re providing
a lot of value and you’re under charging.
That can cause positioning problems and require people
to kind of lose confidence in your product.
Or you might be charging too
much and chasing people away.
Or there might not be enough value in your product.
And if you set that price a little
bit more appropriately, that will help you gain
more traction and as such, generate that much
more revenue because it’s priced appropriately relative to
the value it’s providing for your customer.
So what I want to do next is I want to
talk to you more about the process that OpenAI and the
folks at Chat GPT are doing in terms of figuring out
how to develop a pricing model for this product.
Now, they’ve shared a survey through Google Forms,
which is super straightforward and easy to use
through their Discord server, which is asking a
ton of questions about pricing.
And there’s two questions in particular that I’d like
to focus on because I feel like they’re really
insightful for those of us out there are trying
to figure out how do we better understand whether
or not our products are priced appropriately?
So let’s take a look at that survey
and in particular those specific two questions.
The first thing I’ll mention is I
love the simplicity of the survey.
It’s just Google Forms.
It doesn’t need to be all that advanced.
And it’s pretty interesting when you think about how
advanced the technology is that powers Chat GPT, but
for this specific purpose, it works great.
It’s a great way to get feedback from the users that
are getting a lot of value out of the tool.
Get our awesome product content delivered daily-ish to your inbox
Now, the two questions in particular that I want to
pay particularly close attention to are related to the upper
and lower bounds of what they ultimately might charge for
the product, which I think is a great way to
gain context around how do we figure out whether or
not the product is priced appropriately.
And one other thing I’ll mention before I speak
specifically to these questions is this tool has provided
so much value for so many people, the use
cases are all over the place.
As I mentioned already, there is a lot of
value that this product has provided a lot of
people, meaning that they have almost unlimited potential to
figure out how to price this product.
But even so, even the fact that that is
the case and they know that is the case,
they’re still figuring out how to price it appropriately
and they’re using techniques and strategies that I’ve leveraged
to help people with their products as well too.
In terms of figuring out the right pricing model, that
could be a really key component for strong product market
fit and figuring out what it is, I’ve worked on
products that had almost everything else relatively well buttoned up
with the exception of their pricing, and pricing mistakes can
be made too low or too high.
Now, the two questions in particular that I want
to talk about, they’re helpful in terms of providing
context in terms of whether or not you might
be charging too much or too little.
And figuring out that right balance means that you’re
going to have the opportunity to create the best
experience for the customer as in you’re going to
be providing them with more than enough value in
the form of this return on investment, which is
then going to in turn enable your product company
to be able to generate maximum value as well. Too.
So getting it right is really important.
Now, like I said before, the two questions
in particular are about exploring these bounds.
And the first, which explores kind of the upper bound,
is framed in a way to kind of get at
whether or not to get more context around what the
top end of that spectrum might look like.
As in where would the product be priced at and what
would that level look like to the extent where it would
be too expensive, to the point where you wouldn’t consider buying
it, as in what’s too high for this product.
Essentially, give me a little
bit more context around that.
Now, on the other end of the spectrum, in order
to figure out the bound on the lower end, the
question is at what point would the product be priced
in terms of that price being too low?
To the point where you would question the
value that you would get from the product.
And this speaks to positioning.
So if you have a product that provides a
ton of value, but it is charging too little,
that can actually impact your customer’s perception of the
value that the product is going to provide.
It’s almost like seeing a high
end product priced very low.
You might assume that it’s fake or it doesn’t work,
or it doesn’t provide the value that it supposedly claims
that it can because it’s not priced appropriately.
It just doesn’t make sense.
So from a psychological perspective, that also makes
it very important to get this right.
Now, there are other questions on the survey, but these
two, I feel like, are two of the most important
ones and I would love to see the results.
I don’t know if I’ll get that opportunity, but
I’ve issued surveys like this myself when I’ve helped
other people with their products and figuring out pricing.
Now, if you’ve got everything else correct and
you have questions about pricing your product in
terms of is it set too low? Is it set too high?
Do you have it set right?
These are questions that I think can help
you very much so in making sure that
your pricing model is designed right.