5 ms·

It's been consistently shown that what people say they'll do regarding pricing and what they actually do are not correlated. Rather than asking people, if you

by Osiris 10y ago

It's been consistently shown that what people say they'll do regarding pricing and what they actually do are not correlated. Rather than asking people, if you can, try just changing the prices and see how customer acquisition changes. I sell a program online to consumers, so for a while I tried several experiments in pricing, including a "pay what you want". Structure. Eventually I settled on a price that's about half what the highest accepted price was ($10) and the typically "pay what you want" price ($1). Right now I sell for $4 (perpetually listed as 50% off of $8), which brings in about as much revenue as the $10 price. The advantage, though, is that it gets in the hands of more people, so there's a higher potential for word-of-mouth advertising. So, I would say, if you're in the position to do so, experiment with the prices in the real world and look at how purchasing behavior changes.

eriknstr 10y ago
>it gets in the hands of more people, so there's a higher potential for word-of-mouth advertising This is a very good point and something I haven't considered. On the flip side, depending on your type of product, I think more customers could lead to an increase in support burden to the point where it is costing you more than the amount of extra dollars you get from the additional amount of customers.
savanaly 10y ago
>not correlated. Eh? So if I told you I had two products A and B and I showed them to potential customers who on average said they would pay $100 for A and $10,000 for B, you wouldn't be willing to bet that when I actually take them to market B would end up retailing for more?
- bayonetz 10y ago
  He must have meant loosely correlated. I'm sure it varies by product type and user knowledge.
- dahart 10y ago
  > you wouldn't be willing to bet...? You just compared two (purely hypothetical) things someone said they'd do, you didn't address what @Osiris was talking about, which is the discrepancy between talk and action. The comment is correct, there is a lot of evidence out there that people do not pay what they say, that actions and talk do not correlate very well. So it would be interesting if you had some counter evidence to back your rebuttal, because theories based on logic alone rarely survive contact with actual human behavior.
rjzzleep 10y ago
> Rather than asking people, if you can, try just changing the prices and see how customer acquisition changes. This is essentially the best advice you can get. IF you have to be safe because you're e.g. in Germany and you can't just change other peoples contracts after they signed up. Just keep the old contract/subscription types and then offer them a migration path sometime in the future.
- prance 10y ago
  > IF you have to be safe because you're e.g. in Germany and you can't just change other peoples contracts after they signed up. Isn't it the very nature of contracts that you cannot change them unilaterally? I'd be very surprised if there are places where you can legally do that, and I wouldn't call such a thing "contract".
crypto5 10y ago
> Rather than asking people, if you can, try just changing the prices and see how customer acquisition changes. You likely can lose chunk of customers because of big price fluctuations..
- icebraining 10y ago
  You can change prices for new customers while keeping the old price for existing customers. Though if it's a price drop, you might want to lower for the existing ones too.
blurble 10y ago
> perpetually listed as 50% off Illegal in the UK IIRC
6t6t6t6 10y ago
> it gets in the hands of more people, so there's a higher potential for word-of-mouth advertising Also, those are customers that will not buy your competitors' product.
- chris_st 10y ago
  Well, depending on price and features, of course. I have purchased both TextMate and Sublime, for instance, and now use Atom.
GordonS 10y ago
> perpetually listed as 50% off of $8 Isn't that quite dishonest? I'm fairly sure this is illegal in at least the UK, so I'd assume in plenty other EU countries too. Are you in the US? Is this practice legal there?
- djKianoosh 10y ago
  this practice is so prevalent here in the US I cant imagine it being illegal
  - gnicholas 10y ago
    Joseph A Bank was sued for perpetual sales [1]. The case was dismissed for defects in the plaintiff's case unrelated to the legal theory (they couldn't produce receipts of their supposed purchases), but of course even an unsuccessful lawsuit of this nature could bankrupt a startup. Of course, without deep pockets, a startup is also unlikely to be targeted for this. 1: http://business.time.com/2012/06/11/can-you-sue-a-store-for-having-too-many-sales/ http://business.time.com/2012/06/11/can-you-sue-a-store-for-...
  - tprynn 10y ago
    You are wrong. Many states have laws against this type of deceptive pricing, and it's against the FCC's guidelines as well: http://www.ecfr.gov/cgi-bin/text-idx?SID=0fe5a1d5614a06c2f279e26eab8caa72&mc=true&node=se16.1.233_11&rgn=div8 http://www.ecfr.gov/cgi-bin/text-idx?SID=0fe5a1d5614a06c2f27...
    - djKianoosh 10y ago
      and yet we dont care when Manning tech books always have a discount someway somehow. there's almost always a deal of the day. just have patience. I know it's not technically perpetual but it has the same effect.
- mehaveaccount 10y ago
  >> perpetually listed as 50% off of $8 >Isn't that quite dishonest? I'm fairly sure this is illegal in at least the UK, so I'd assume in plenty other EU countries too. Are you in the US? Is this practice legal there? That's weird, are people in the UK not able to see through marketing gimmicks?

by Osiris 10y ago

eriknstr 10y ago

>it gets in the hands of more people, so there's a higher potential for word-of-mouth advertising This is a very good point and something I haven't considered. On the flip side, depending on your type of product, I think more customers could lead to an increase in support burden to the point where it is costing you more than the amount of extra dollars you get from the additional amount of customers.

savanaly 10y ago

>not correlated. Eh? So if I told you I had two products A and B and I showed them to potential customers who on average said they would pay $100 for A and $10,000 for B, you wouldn't be willing to bet that when I actually take them to market B would end up retailing for more?

bayonetz 10y ago
He must have meant loosely correlated. I'm sure it varies by product type and user knowledge.
dahart 10y ago
> you wouldn't be willing to bet...? You just compared two (purely hypothetical) things someone said they'd do, you didn't address what @Osiris was talking about, which is the discrepancy between talk and action. The comment is correct, there is a lot of evidence out there that people do not pay what they say, that actions and talk do not correlate very well. So it would be interesting if you had some counter evidence to back your rebuttal, because theories based on logic alone rarely survive contact with actual human behavior.

rjzzleep 10y ago

> Rather than asking people, if you can, try just changing the prices and see how customer acquisition changes. This is essentially the best advice you can get. IF you have to be safe because you're e.g. in Germany and you can't just change other peoples contracts after they signed up. Just keep the old contract/subscription types and then offer them a migration path sometime in the future.

prance 10y ago
> IF you have to be safe because you're e.g. in Germany and you can't just change other peoples contracts after they signed up. Isn't it the very nature of contracts that you cannot change them unilaterally? I'd be very surprised if there are places where you can legally do that, and I wouldn't call such a thing "contract".

crypto5 10y ago

> Rather than asking people, if you can, try just changing the prices and see how customer acquisition changes. You likely can lose chunk of customers because of big price fluctuations..

icebraining 10y ago
You can change prices for new customers while keeping the old price for existing customers. Though if it's a price drop, you might want to lower for the existing ones too.

blurble 10y ago

> perpetually listed as 50% off Illegal in the UK IIRC

6t6t6t6 10y ago

> it gets in the hands of more people, so there's a higher potential for word-of-mouth advertising Also, those are customers that will not buy your competitors' product.

chris_st 10y ago
Well, depending on price and features, of course. I have purchased both TextMate and Sublime, for instance, and now use Atom.

GordonS 10y ago

> perpetually listed as 50% off of $8 Isn't that quite dishonest? I'm fairly sure this is illegal in at least the UK, so I'd assume in plenty other EU countries too. Are you in the US? Is this practice legal there?

djKianoosh 10y ago
this practice is so prevalent here in the US I cant imagine it being illegal
- gnicholas 10y ago
  Joseph A Bank was sued for perpetual sales [1]. The case was dismissed for defects in the plaintiff's case unrelated to the legal theory (they couldn't produce receipts of their supposed purchases), but of course even an unsuccessful lawsuit of this nature could bankrupt a startup. Of course, without deep pockets, a startup is also unlikely to be targeted for this. 1: http://business.time.com/2012/06/11/can-you-sue-a-store-for-having-too-many-sales/ http://business.time.com/2012/06/11/can-you-sue-a-store-for-...
- tprynn 10y ago
  You are wrong. Many states have laws against this type of deceptive pricing, and it's against the FCC's guidelines as well: http://www.ecfr.gov/cgi-bin/text-idx?SID=0fe5a1d5614a06c2f279e26eab8caa72&mc=true&node=se16.1.233_11&rgn=div8 http://www.ecfr.gov/cgi-bin/text-idx?SID=0fe5a1d5614a06c2f27...
  - djKianoosh 10y ago
    and yet we dont care when Manning tech books always have a discount someway somehow. there's almost always a deal of the day. just have patience. I know it's not technically perpetual but it has the same effect.
mehaveaccount 10y ago
>> perpetually listed as 50% off of $8 >Isn't that quite dishonest? I'm fairly sure this is illegal in at least the UK, so I'd assume in plenty other EU countries too. Are you in the US? Is this practice legal there? That's weird, are people in the UK not able to see through marketing gimmicks?