Re: The Psychology of pricing

From: John Piccirillo <john_at_tmlk.com>
Date: Thu 05 Oct 2000 15:38:45 -0500

Your pricing model should not be based on cost. It
needs to be consumer focused- what value do users
assign to the product (ebook) that you are publishing,
and can you make money at that price.

Our company has been working for the past 18 months on
an effective solution to monetize digital content. We
researched the audience to find out where our true
value was and what people were willing to pay for our
service. to wonderful results. Here's what we found:

On the Web users expect discounts to everything,
especially content If you don't provide additional
value beyond the content, you can't charge for it
Downloading special tools, browsers, viewing devices
decreases your pool of customers Allow users to
purchase as much or as little as they want (a teaspoon
or a truckload)

We are in the sports information business and uniquely
positioned because we get information first, before the
sports media does. Our added value is speed. Sports
fans crave info, they want it fast and they want it
now. We instituted a delivery option that allows fans
to get info instantly with no surfing and no waiting.
So, we don't charge for the content (they can go to the
site and view our info for free), we charge for the
delivery of the info the instant it is available (added
value). We do this on a monthly or annual subscription
basis.

We found the price people were willing to pay for
delivery was one third of what we were trying to
charge.

Plus, we 'crippled' the content so it is viewable
online, but the functionality is limited. We did it
without any special viewers or tools- just a standard
web browser. Since many of our users want to download
our data, we instituted a micro pay option on each
download to create another revenue stream.

Stephen King has been succesful I think b/c he has a
cult like following, b/c you could only get the book
online, and because of his egalitarian approach. The
next step is probably to 'pay what you think its worth'
and if enough money is made the next chapter goes up-
dynamic pricing for everyone.

If anyone is interested in the pricing model we used
for the research project, please let me know. We've
just implemented many of these changes so I don't have
empirical evidence to gauge success, but things are
moving in the right direction.





Received on Thu Oct 05 2000 - 15:38:45 CDT