Here’s an interesting pricing model for t-shirts. 200nipples (yes, even the name is, umm, remarkable) sells limited edition runs of 100 tshirts. The first shirt costs $1, the second $2, all the way up to $100. This has the nice … Read More
pricing strategy
The Psychology of Price Increases
In last week’s post How to Raise Prices, I referenced two interesting articles on techniques for raising prices, and also suggested using unbundling to differentiate between customers who want maximum value and customers who want minimum price. Today, let’s look … Read More
How to Raise Prices
With the economy in the state it’s in and the price of energy going up, a lot of companies are making some tough pricing decisions. Their costs are going up, squeezing their margins. Also, they are worried that if they … Read More
“How are we different?” not “How are we cheaper?”
Most new businesses fail. They typically fail not because they can’t deliver value, but because they can’t capture enough of that value to turn a profit and grow. Capturing value requires a clear value message and an appropriate pricing policy. … Read More
Not Free! Why $0.00 Is Not the Future of Business
Wired editor-in-chief Chris Anderson recently wrote a provocatively-titled article called Free! Why $0.00 Is the Future of Business. Anderson argues that the economics of computing on the net, where storage and bandwidth costs fall even faster than the cost of … Read More
A Powerful Pricing Thought Experiment
Courtesy of Seth Godin, who asks you to think about real estate agents charging 6% of a transaction, and facing mounting price pressure. The challenge is… what if you had to charge 7%. What if you had to charge more … Read More
(E)Book Pricing, Part 2
The folks over at Wrox are running a pricing experiment. They’re discounting their ebooks by 50% to see how much extra volume they get, and whether they can convert people who steal ebooks into paying customers. While this is an … Read More
Blockbuster Goes after Netflix with Pricing
Punished by the the popularity of cheap DVDs, video-on-demand, and the Netflix DVD-rental-by-mail service, Blockbuster announced further price cuts on its subscription plans. These plans allow consumers to rent and return videos at stores or by mail. The added ability … Read More
Airlines Try New Pricing Moves
With high fixed costs and perishable products, airlines have long been the poster child for “yield management”, “revenue management”, and other sophisticated statistical methods for optimizing profit. Or minimizing losses. While travel is up, airlines are still looking for ways … Read More
Why Starbucks Coffee Is Cheap
Starbucks gets a lot of attention in the pricing world for their ability to charge $4+ for coffee. There are good reasons they can do this (selling something physically addictive doesn’t hurt), but that’s a different post. This post is … Read More