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> So the problem you have is that you think (but don't know) that your product is much more valuable to your users than they think it is (since they're only wil
by gridlockd 7y ago
> So the problem you have is that you think (but don't know) that your product is much more valuable to your users than they think it is (since they're only willing to pay $20 for it).
No, the problem is that whatever you think your product is worth is irrelevant. What matters is your costs, that puts the bottom on the price, unless you want to burn cash for growth. Your customers expectations are the ceiling.
Of course all your customers are not alike and maybe there's 10% that would pay so much more to outperform the other 90% in revenue. That's when upselling comes into play, or maybe you want to focus only on the 10% entirely.
> If your program is actually worth thousands of dollars to the user, but they're only willing to pay $20 given their current knowledge, you don't want to tilt their expectations by "a little bit". You want to tilt their expectations by a couple of orders of magnitude. Which, as noted above, is not doable by hacking how your pricing is presented on a web page.
It's not doable at all. Nobody who expects to pay $20 for something will shell out $200 for it, unless they have looked everywhere and figured that everyone else charges in the same ballpark, or that you are the only option and they really need your product.
Anchoring isn't magic, it's the same kind of trick that makes $9.99 appear substantially cheaper than $10.00. It'll give you a slight boost.
- pdonis 7y ago> What matters is your costs, that puts the bottom on the price, unless you want to burn cash for growth. Ok, so in the situation you describe, what are your costs? If that's so important, why haven't you told us what it is? > Your customers expectations are the ceiling. Your customers' expectations are based on what they think the value of the product is to them, which is based on what they think the product can do for them. If your product is worth $1000 to a significant number of customers, it must be able to do valuable things for customers that products selling for $20 a unit just can't do. Tell your customers what those things are, and their expectations will change. What is true is that the number of customers that can get $1000 of value from your product will be significantly less than the number that can get $20 of value from it. But it makes a big difference whether the first number is zero (or close enough to it to make no difference) or a significant fraction of the second number. Your hypothetical was that it's the latter.