That was a good read. He says: "We want to charge the maximum amount that our customers are willing to pay." At the risk of being pedantic, the more precisely c

That was a good read. He says: "We want to charge the maximum amount that our customers are willing to pay." At the risk of being pedantic, the more precisely correct answer is to charge each customer how much that customer is willing to pay. All other things being equal, that would be optimal pricing. All other things, of course, aren't equal. That is why versioning exists. It lets you better approximate getting each person to pay how much they'd be willing to pay without all the hassle. He has that much right. The part he neglects to mention is why three versions is a magic number. He hints at the reason but it should be stated more often. People do not like complexity so having -too- many choices becomes overwhelming. Three lies in a sweet spot where people tend not to be overwhelmed (small, medium, large). There is a more important reason, though, and that is the aversion to extremes. People are averse to choosing any extreme without good cause. Three is the minimum number to take advantage of this. If you had just two versions, the best way to force people to upgrade to the better and more expensive version is by simply introducing a new super-expensive third option. This causes angst in people who might otherwise buy the cheapest. Hence why everything comes in small/medium/large, etc. This is also why the "default" position is always the middle, and you have to ask for the others specifically. Use words for the lowest like "basic" or "starter" etc. In general, versioning in threes is done to force "most" people into the middle option and let you profit more on your "power users" in the high-end (for example, I am a known "power-user" at Wendy's).