Be Destructive

I had the opportunity of listening to Mr Mahesh Murthy on the subject of Pricing Models for a startup, at the Proto.in event held in Pune sometime back.

He was of the opinion that if you are a Startup having a product/ service which is not exactly new to the world; but provides a certain level of differentiation from the existing products; there is no point in being competitively priced with a price band of +- 10% wrt existing products/ service; you need to be DESTRUCTIVE in your pricing model; either offer the product at a 100% premium of the existing product or at 10% of the existing product price..then only you shall be able to carve a space for yourself in the already saturated market...

Recent product (pricing models) launches by the TATA group in the GSM and CDMA spaces seem to have gotten the point...

First, for the GSM service TATA alongwith DoCoMo launched the "Pay Per Second" tariff plan where consumers actually only pay for the number of seconds they talk.
This is specifically (I think) targeted for consumers who need mobile connectivity; but are usually only going to use it for receiving calls rather than calling themselves; and even if they do call, their call lasts hardly lasts a few seconds...

Then, TATA TeleServices came out with a plan "Pay Per Call" wherein a consumer has to pay a fixed amount for a single call irrespective of the amount of time the call lasts.
This (I think) is specifically targeted for consumers who use their cell phones to make calls lasting long durations...

In both of these above plans, the point to be noted is that both of these are examples of DISRUPTIVE pricing models; never thought of or heard of before in the market; by these two plans I am sure they have managed to attract a lot of consumer attention; though it remains to be seen whether it will result in converts...

So, be it a Startup or not; being DESTRUCTIVE surely helps in grabbing the eyeballs...