3 ms·
very informative post, but I'm afraid it leaves us with incorrect conclusions. In all examples, no one tested just one high price point for the item. The story
by davemel37 14y ago
very informative post, but I'm afraid it leaves us with incorrect conclusions. In all examples, no one tested just one high price point for the item.
The story starts out talking about how value is relative to each purchaser, so with different price points you can draw out the more valuable customers with tiered pricing and get more than your original pricing from those who opt in for the higher price point.
The glaring omission is not testing just the highest price point. The author explains he didnt want to price out interested readers at lower price points. I don't understand why though. The people who appreciate your value will pay a premium, and others who are not willing to pay a premium, or not really worth having as customers for many reasons, if not for the simple reason that if your goal is to create value, why wouldnt you focus on the areas you can create the most value? There are other reasons I would be glad to share...
The strategy of "comparing apples to oranges" so you can sell an ebook for $39 instead of $10 is a sound one, but the same strategy could work with only one price point at $179 or even $1700 if the value is there for your audience. In this case, the best comparison would be, "you can pay $10,000 or more to learn how to develop apps at college, or you can pay a developer $100k a year to develop for you, or you can buy a proven strategy on how to develop apps from me for only $1799."
Would everyone pay? of course not. Would some people pay? All you need is less than 20 for it to be a bigger blockbuster than his original sales.
I would personally be shocked if he only had the highest priced point bundle as the only option if he didnt generate much more revenue. Arguably, atleast a few of the people who bought at other price points would come around and spend more.
So, this article is absolutely right, draw your customers away from being able to compare your product to other products in the same category, and focus on the value proposition to them... But, dont take his tiered pricing proof as set in stone, odds are it cost him more revenue by doing it than if he didn;t.
- ahoyhere 14y agoMany tests have been made along these lines, and the sales are usually lower for the single high price. The theory is because it makes the lower tier look like a steal.