How we set a price, the gist

How we set a price

Before anything is on sale, the founder of an astrology company writes down the three things he will take money for, the two he will not, the exact prices, and the arithmetic he used to reach them.

This is the short way in. The essay has the working, the sources and the sky.

The most interesting number in the plan is not a price. It is 190. That is how many paying members the whole business is built to need, and the argument is that a company needing two hundred people can afford to be calm with all of them, while a company needing twenty thousand cannot.

Money here may buy three things. Time, meaning an hour of someone's attention on a question you brought. Teaching, meaning a class or a written explanation of how a claim is checked. Written work, meaning a guide you buy once and keep.

The reason is that all three have a size that stays put. An hour is an hour whether you turn up calm or frightened. A guide is the same guide on a bad day. So if you get more worried halfway through, nothing you are buying gets bigger and nothing costs more.

Two things money may not buy: a fault found in your birth chart, and the cure for one. Those have no fixed size. How much of them can be sold depends on how scared the customer is, so the company's income would become a way of measuring people's fear.

The price is also decided before any conversation starts, never during it and never after somebody has looked at your chart. People are willing to pay most at the moment they are least able to judge, and any way of setting a price mid-conversation is a way of finding that moment.

Then the numbers, none of them open yet. A Reading Room membership at INR 299 a month. A Study Circle, with a live class each month, at INR 999. Guides you buy once, between INR 499 and INR 1,499. The essays and these plain-English gists stay free.

He shows his working: 150 members at 299, plus 40 at 999, plus 20 guides at 799, comes to INR 1,00,790 a month, which is the target. He also subtracts the fee the payment company takes, roughly INR 7 out of every 299, on the grounds that a business hiding its small subtractions has not earned trust with big ones.

Words decoded

birth chart (kundli): a diagram of where the sun, moon and planets were at the moment somebody was born
fault (dosha): a supposed flaw read in a birth chart, often the thing a customer is then sold a fix for
dakshina (दक्षिणा): the traditional offering given to a priest for a rite or to a teacher for lessons, with no listed amount
scope: the written list of what a paid thing includes and what it leaves out
payment gateway: the company that moves money from your bank to a business, taking a small cut
GST: the tax added to that cut in India
recurring mandate: the standing permission you give for a monthly payment, which Indian rules let you cancel at any time

Why anyone should careAlmost every price you meet online was set by someone guessing what you would pay. This is a rare case of a seller publishing the arithmetic first, including how few customers he actually needs, which is the number that decides whether a business has to frighten people to survive.

Read it properly, 6 min How we set a price