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This guy doesn't get consumer pricing psychology. It has been shown over and over again that consumers prefer fixed price, even if they have to pay more to get

This guy doesn't get consumer pricing psychology. It has been shown over and over again that consumers prefer fixed price, even if they have to pay more to get it. They don't want to be on a meter, they want a predictable budget. The telcoms don't set the dominant pricing model, the consumer does. There have been plenty of iterations of $/min and $/MB telcom plans already tried in the marketplace. And telcoms would probably prefer a variable pricing model, makes their business model sane. Want to see a telcom exec head explode? Ask him if he wants more traffic on his network or not.

jerf 15y ago
And the way to do that is: Fixed price for the first X GB, generous enough to cover ~90% of the users, variable pricing thereafter, and the aforementioned transparency about the status of your account. (In particular, text message alerts warning you when you've hit 90% of the limit, or some other active notification that you're going over, not just some abstract page that you could, theoretically, hit.)
- andrewaylett 15y ago
  This. It's what I've got, pretty much, on my ADSL: 50Gb/month (doubling (again) next month) with a sensible per-gigabyte never-expiring top-up if I need more.
- billybob 15y ago
  This pricing model sounds to me like "the user is always punished." You bought XGB this month. You didn't use it all? Ooops, you overpaid. Punished. You used more? Ooops, you pay a higher rate for the overage. Punished. How about we treat this like any other commodity and I get exactly what I pay for?
  - jerf 15y ago
    jpadkins: "It has been shown over and over again that consumers prefer fixed price, even if they have to pay more to get it." It is pretty well established. Where your model deviates from reality is in not accounting for the mental costs associated with having to (/wanting to) track how much bandwidth you've used on a minute-by-minute basis... how much is that Netflix movie costing me? How much is this Youtube video costing me? etc etc You can argue about how irrational this is. You can even be objectively correct. And it won't matter very much. Even objectively, you do need to worry about some fixed costs too. A package deal for the first X GBs might now be as irrational as you initially think.
  - matwood 15y ago
    Not necessarily. Even services that appear to be variably priced like utilities have some base cost on every bill. It's basically the cost have the service available even if you didn't happen to use it.
billybob 15y ago
I guess I don't get it either. "Fixed price" is always a floor, never a ceiling. How is that good for you? My power bill isn't the same every month. My water bill isn't either. I know my patterns and roughly the monthly cost, and I can use less if money is tight. You know how much cellular data I use per month? 0KB. Why? Because I don't want a giant fixed price add-on to my bill. If I could buy a smart phone, use WiFi 95% of the time, and spend $5 on data once in a while when I need it, I would use some. But I'm not jumping on a fixed price. I'm not paying for more than what I use.
- apenwarr 15y ago
  You just described the payment model Apple negotiated for the iPad. No contract, no subsidies, just a flat payment: $x for $y GB in 30 days. If you don't use it in 30 days, it's gone, but if you use it in less than 30 days, you can just buy another block of bandwidth (and restart the 30-day counter). I think it's great, especially when travelling to different countries (which seem to all offer this option - only for iPad).

jerf 15y ago

And the way to do that is: Fixed price for the first X GB, generous enough to cover ~90% of the users, variable pricing thereafter, and the aforementioned transparency about the status of your account. (In particular, text message alerts warning you when you've hit 90% of the limit, or some other active notification that you're going over, not just some abstract page that you could, theoretically, hit.)

andrewaylett 15y ago
This. It's what I've got, pretty much, on my ADSL: 50Gb/month (doubling (again) next month) with a sensible per-gigabyte never-expiring top-up if I need more.
billybob 15y ago
This pricing model sounds to me like "the user is always punished." You bought XGB this month. You didn't use it all? Ooops, you overpaid. Punished. You used more? Ooops, you pay a higher rate for the overage. Punished. How about we treat this like any other commodity and I get exactly what I pay for?
- jerf 15y ago
  jpadkins: "It has been shown over and over again that consumers prefer fixed price, even if they have to pay more to get it." It is pretty well established. Where your model deviates from reality is in not accounting for the mental costs associated with having to (/wanting to) track how much bandwidth you've used on a minute-by-minute basis... how much is that Netflix movie costing me? How much is this Youtube video costing me? etc etc You can argue about how irrational this is. You can even be objectively correct. And it won't matter very much. Even objectively, you do need to worry about some fixed costs too. A package deal for the first X GBs might now be as irrational as you initially think.
- matwood 15y ago
  Not necessarily. Even services that appear to be variably priced like utilities have some base cost on every bill. It's basically the cost have the service available even if you didn't happen to use it.

billybob 15y ago

I guess I don't get it either. "Fixed price" is always a floor, never a ceiling. How is that good for you? My power bill isn't the same every month. My water bill isn't either. I know my patterns and roughly the monthly cost, and I can use less if money is tight. You know how much cellular data I use per month? 0KB. Why? Because I don't want a giant fixed price add-on to my bill. If I could buy a smart phone, use WiFi 95% of the time, and spend $5 on data once in a while when I need it, I would use some. But I'm not jumping on a fixed price. I'm not paying for more than what I use.

apenwarr 15y ago
You just described the payment model Apple negotiated for the iPad. No contract, no subsidies, just a flat payment: $x for $y GB in 30 days. If you don't use it in 30 days, it's gone, but if you use it in less than 30 days, you can just buy another block of bandwidth (and restart the 30-day counter). I think it's great, especially when travelling to different countries (which seem to all offer this option - only for iPad).