E79: The ChatGPT Pricing Model Research

The OpenAI team shared a survey on their Discord server to gather data on building a pricing model for ChatGPT.

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

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Episode Transcript
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.

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.