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A Guide to Pricing Plans

capitalandgrowth.org

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Re: A Guide to Pricing Plans

#2

Post by csa »

This article does a very good job of explaining (with examples) some of the fundamentals of pricing plans. It describes the basics of the “blocking and tackling” if pricing that so many businesses get wrong.

If you own a business, especially in the current environment, I would strongly suggest exploring the ideas in this article.

Re: A Guide to Pricing Plans

#3

Post by erikrothoff »

Honestly, this just feels like marketing bull. What conversion effects are realistic to expect after implementing any of these? My experience after trying a couple is zero change in conversion and zero change in any customer satisfaction metric. It might work if you have product market fit and need to optimise the last 3% in conversions.

Re: A Guide to Pricing Plans

#5

Post by davidajackson »

> Yes, Product C is slightly cheaper than the most expensive option, but it offers less storage than any of the options.

Why would a business want wrong looking pricing on their pricing page, "decoy"s aside? Seems that would deter people more. Makes the business seem like it doesn't have its stuff together. Would you trust a company that seems like it can't do simple math? I think the author may be getting at something here--perhaps adding a third, unrelated or irrelevant option drives more conversions, but nonsensical pricing doesn't seem like the way to do that.

Re: A Guide to Pricing Plans

#6

Post by lifeisstillgood »

I like the Golden Ratio approach (b+a : b as b:a). So you get a simple 5-3-2-1 approach

49 - 29 - 19

for your pricing plans. Or I guess

125 - 74 - 49

It's just easier to remember a fibonacci sequence than worry about marketing research.

What surprises me however is the reverse ordering

'''Reordering the pricing table in descending order from fastest/most expensive to lowest/cheapest resulted in a 14.9% increase in overall orders.'''

I am not sure this carries from pricing - I recently bought a new ISP connection at home (lockdown, plus fibre to house suddenly became available). I went for the most expensive- partly because the feature set was easily rankable. I could get 300, 600 or 1Gb - so going for the top level seemed easy (plus lockdown panic).

But with features that don't rank (a book, a book with video course, a book with two hour consult with author), suddenly I am not comparing the same feature (download speed) but more of it, I am having to ask do I want this extra feature at all - i am in effect not making a pricing decision but making a feature choice decision, proxied by price.

So I am not sure the research carries over. And that leads me back to the easy version of use the fib.

Re: A Guide to Pricing Plans

#7

Post by gk1 »

This is all about tricking people, and nothing about designing pricing to match the value provided.

Pricing, especially for software products, is one of the biggest levers for increasing revenue through new and even current customers. It’s very important to get it right, and to experiment occasionally. (I know because I’ve done it for companies.) It involves a lot more than growth-hacking the pricing page.

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