When I started my company M/s HomePlanGuru.com, I was not sure about how to do the pricing. I was providing all the plans (viz Floor Plan, 3D Plan, Electrical Usability Plan, Plumbing Usability Plan, etc) at a flat Rs.20/- per square feet. This means that if a customer intends to buy/build 1000 sq.ft home, he should pay Rs.20 x 1000 = Rs.20,000/- for all the plans I provide. For first six months, I was not able to sell my concept at this rate. Then I realized the mistake in my pricing model when I heard about ‘The Bottom of the Pyramid’ model by C K Prahalad.
In India (and many other developing countries, I guess) people don’t have the habit of planning their dream home. They find it as ‘waste’ expense to do planning. Not only that, the architects used to charge anywhere between Rs.25,000 to Rs.1,00,000/- for the simple drawings. This was another reason for people not going to Architects and plan for their dream home.
I changed that model through my new venture HomePlanGuru.com. I understood that people won’t mind paying in small amounts. If they are happy with the initial plan, then they won’t mind paying a bit more for the plans.
I priced my services in such a way that even a lower-middle class person can afford a simple plan. For example, my service charge for a 2D Floor Plan is just Re.1/- per sq.ft which means for a 1000 sq.ft. home, it is just Rs.1000/-; for 3D Plan it is just Rs.3/- per sq.ft which means for Rs.3000/- one can get a basic 3D model of their dream home with all the furniture, fixtures, etc placed in 3D which they can walk-through from their own PC/Laptop using FREE Google Sketchup tool. I also took a bold decision of publishing my service charges for all the services we do in our website because of which the customer feels confident about how much they would have to spend for planning.
Thanks to C. K. Prahalad who helped me understand the ‘Pyramid’ model to price my services. It is unfortunate that he is no longer physically with us though he is there in our minds.
