Pricing

I have strong opinions about pricing in today’s marketplace, and I really admire businesses who create excellent pricing strategies — like the Kickstarter for RooSport 2.0 Wallet.


The pricing strategy reveals genius level wisdom, and all early adopters got a better deal.  the sooner you bought, the less you paid.  As each “deal” sold-out, another artificial deadline approached – with pricing structured slightly higher for the same merchandise.

Each sell-out created another sense of urgency:

  • 200 backers at $14/wallet (sold out) $2,800
  • 300 backers at $16/wallet (sold out) $4,800 {$7,600 total}
  • 1,000 backers at $19/wallet (sold out) $19,000 {26,600 total}

This Kickstarter was fully funded at $20,000, but it didn’t stop there…

  • 544 backers at $21/wallet | This level was unlimited — and the highest price per wallet.
  • Several “quantity” discounts were offered and those included some extras.
  • Even buying TEN wallets would only discount the pricing down to $17.90/each.

This pricing strategy was obviously developed to reward early adopters with the best prices.  This is important for attracting attention to a Kickstarter project, and the momentum from those initial contributions pushed this one into a wild success with over $115,000 in funding for a project with a modest goal set at $20,000.

Could this work elsewhere?  I think so…

What if your cable company followed a similar philosophy and used your contract date as a factor for determining your ongoing rates and for discounting their future price increases?  Long-term commitments add the greatest value to businesses.  It’s more expensive to gain a new customer, than retain an existing relationship.  Discounting new customers just angers existing customers and motivates them to keep switching to get the next limited-time offer on cable, cellular service, or internet access.  These businesses all have the same misguided perspectives that punish loyalty.  (They ultimately pay for it with an endless churn of former customers returning over and over, for a limited time.) Netflix recently raised pricing for new subscribers, but held firm on existing members…which seems to be working for them.

Corporate pricing is often misguided too.  Sometimes the SIZE of a prospect determines their contract price, rather than the volume of their actual business.  It shouldn’t matter that your customer has 300 stores if you’re only doing business with twelve of them.  What if your corporate pricing were completely transparent?  What if your discounts were based on the actual volume of the purchase, like the reverse of the RooSport structure?  Why not offer the first 1000 Widgets annually at $1.00/each and the next $5,000 at $0.95/each?  You could maintain one price structure for everyone, and never worry that anyone had a better deal — with simplicity and integrity perfected, the customer is rewarded and in the driver’s seat at the same time.

 

DrDIY is a food-safety professional with an extensive sanitation background within the food & beverage manufacturing industry. He consults on food-safety - from hygienic-design to integrated pest-management through microbiology support, quality improvement audits, total-process management philosophy, CIP optimization, and lean-six-sigma project participation.

Overcoming an extended disability through a complete overhaul of diet and nutrition, DrDIY embraced traditional naturopathy and combined the wisdom of nature with the principles of modern sanitation to help build more sustainable systems within the food industry. He continues to study and practice holistic nutrition, food-safety, detoxification, and self-improvement and this site represents personal experience and opinion - and does not reflect the position of any employer past or present.

His posts have always been a 'stream of consciousness' montage with occasional ventures into Christology and pop culture, just to keep things interesting.

Please take note: Great conversation involves many ingredients - including disagreement or healthy-conflict. I may delete comments that are illegal, offensive or off-topic, obscene, fraudulent or misleading, deceptive or property of others. Respectfully articulated differing perspectives are always welcome.