Three quarters of innovations fail to reach their goals, according to a survey of businesses buy Simon Kucher & Partners 2017.
‘Failure’ in a business environment almost always comes down to revenue.
According to the same survey of classifieds businesses, two thirds of companies are currently considering tweaking their pricing model.
The advisory firm has some tips for product pricing online.
MORE IS NOT MORE
Feature shock – a phenomenon that was represented in the presentation by a Swiss Army Knife.
“Someone can look at a product with all the features and innovations and say that’s cool, but would I pay extra for it? Hell no!”
“THEY GO LOW, WE GO MIDDLE”
Behavioural economics shows people will gravitate toward the middle product when it comes to price, but it pays (literally) to stick to 4 or 5 offerings.
IT’S ALL RELATIVE
A premium tier cost price can alter cost perception.
The assumption has been a smaller screen has an effect on UX and therefore transaction outcomes. Not so. The experience of their clients is that consumers are not deterred by a mobile screen transaction, when it comes to higher price points.
PRICING MODELS SHOULD EVOLVE WITH YOUR PRODUCT
“No one model is best, it depends entirely on the efficacy for your users.”
- pay per use
- subscription fee
- flat fee
- introduction fee
- commission per transaction
- points or credits for partners
These can and do work – not for all, and not for anyone all the time.
In the words of serial investor and entrepreneur David Gonzalez Castro of Red Arbor to the Global Online Classifieds Summit in June:
“If content is king, cash flow is King Kong.”