On Video Games and Pricing Unit
As a kid raised in the 90s, I spent my early teenage years playing games like Super Mario World or Zelda. All the cool kids from this era begged their parents to spend $70 for a game that will last a few hours (Mario World takes 5 hours while Zelda, one of the longest games, takes 15 hours to finish).
Video games have followed me through the years. The video game industry matured significantly and games have complex story lines and breathtaking graphics as Red Dead Redemption 2 below that I recently completed after 60 hours.
Games Red Dead Redemption 2 or Cyberpunk 2077 take at least 50 hours to finish, and completing the game at 100% requires more than 100 hours (see data for Red Dead Redemption 2 or Elden Ring). Those games are so elaborated they are most expensive than movies to produce (Cyberpunk 2077 cost more than $400M to produce).
Pricing Unit
Video games are a good example showing that pricing adapts with your target market and environment.
Game price did not change much over the last 20 years (~$70) and it takes longer to finish a game. The cost of an hour of entertainment is very cheap compared to watching a movie at the theater.
If the video game industry were to charge like a SaaS business (e.g., per hour of entertainment), current blockbusters (Red Dead Redemption 2, Cyberpunk 2077, GTA 6, Diablo 3) would cost $200+. This would (obviously) be a non-starter for many players. But I could see game publishers making the argument.
Pricing is drastically different based on your industry, market, and target audience. For example, enterprise SaaS products are often charging on usage while consumer products often use a fixed price (imagine Netflix charging you per hour).
In the early days of your startup, it’s tempting to use the same pricing model as your competitors. However, it might become a differentiator or a big money-maker. Do not hesitate to iterate on your pricing model until you have a sweet spot that yields high-margins.