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That website looks (and reads) like one of those single-page secret ebook sales web pages from the 90s.
My personal take on it is that there are many millions of dollars left on the table because people don’t do basic things like the ideas in the article.
These ideas have been around since the 1980s... they are not new. That said, people still don’t implement them or implement them well.
As a consumer I'm really not a fan of these techniques. I'm biased but our SaaS just has one price, no annual discount, no messing. It seems to be working out. I think people appreciate the straightforward approach when everything these days seems to have a pricing table.
If you want to make more - and the reasons for that can vary from pure greed to absolute need - experimenting with pricing can have the best effect, as every extra dollar MRR compounds over time, and it is often easier to get 10% out of customers than 10% more customers. The patio11 "charge more" advice is an easy place to start, and if you grandfather in all old accounts, there is minimal risk in doing so.
But it is your business, so do what you think is best.
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.
2. In most cases, a 3% improvement from a pricing page that previously did not implement any of these ideas would be a very low rate of improvement.
3. If you think that this is marketing bull, then I am guessing you simply haven’t tried to run any experiments like this or read about folks who diligently did. All of these ideas are rock solid.
...Yet, this formula has never before been stated. That is, until now. ...page goes on to detail things that have been widely published and discussed all over the place.
The independent findings have been published but no one had put them into a cohesive whole "formula". All the technologies Tesla uses existed but no one had created a Tesla :)
For anyone who has studied pricing the least bit, these ideas, even put all into one page, are not particularly novel.
The hard part, imho, is to get people to actually believe these ideas work. As replies on this thread show, there are doubters even though these ideas are just pricing fundamentals.
> 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 somethi…
IIRC, around the time the Economist did this change, their annual print price increased. I imagine that this change made the transition much smoother.
Earlier quoted context omitted.
The independent findings have been published but no one had put them into a cohesive whole "formula". All the technologies Tesla uses existed but no one had created a Tesla :)
All of these ideas were discussed in a pricing seminar I had in the early 90s. For anyone who has studied pricing the least bit, these ideas, even put all into one page, are not particularly novel. The hard part, imho, is to get people to actually believe these ideas work. As replies on this thread show, there are doubters even though these ideas are just pricing fundamentals.
What would be more powerful is a "formula" for figuring out the exact willingness to pay for a product to know what number to anchor/distract around as your target number. Figuring out willingness to pay is one of the actually hardest problems out there that a never before seen formula would be interesting for. But like, the anchoring effect? That's not even marketing 101, that's covered in AP psychology
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.
Hmmmm... maybe.
That said, I would say that they are more often just a way for a company to price their products in a way that more accurately reflects the value to the purchaser.
The easiest example of this is anchoring. The difference in a pricing page that offers 100-220 and a page that offers 100-220-500 is typically very large, and that’s true even if no one selects the 500 option! Having that high end third option effectively gives folks the permission to select a more expensive option that probably has more utility for them and/or their organization.
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.
Why would you design a price for "value provided"? That's highly subjective to the user. Users also generally only pay for what they expect to pay, not the value they're getting. For instance, some utility might save hundreds of hours and thousands of dollars over the course of its usage, which is tremendous value . Yet if the average user expects that it should cost no more than, say, twenty dollars, that's what the…
> 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 somethi…
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.
Can you expand a bit? I'm genuinely curious about your experience helping customers price products.
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1. A software company that most people here would recognize (and many use) asked me to find out why corporate/enterprise users weren't upgrading from the free and low-cost plans to the upper tiers. After extensive research and customer interviews, I identified five main benefits their enterprise users were getting from the platform.
The twist: Four of those five benefits were available on the free plan. And the "premium" features on the top plans were of no use to them. No wonder they weren't upgrading.
Soon after, the company overhauled their pricing plans to capture more value ($$) from the benefits they provide.
This was a major breakthrough for them and led to fantastic outcomes.
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2. Another software startup, smaller than the one above but still recognizable by a good fraction of HNers, was losing potential customers because their pricing tiers were based on # of servers. Because 1) EC2 and Docker were becoming a thing at the time, so pinning the price to "number of servers" resulted in some absurdly high quotes for not-so-large teams, and 2) the legacy/incumbent providers pinned their pricing to data volumes, so the people who wanted to switch found it hard to compare pricing and see that this company's plans were a better value.
We changed the pricing to be based on data volume and designed the tiers to be a bit lower than the big incumbents and to not encourage current customers to downgrade.
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And sure, while this was all going on there were designers and product marketers busying themselves with optimizing the pricing pages for conversions. However, a good outcome for them would be a 5–10% increase in signups, whereas the outcomes from the two examples above were measured in seven-figure increases in ARR and VC rounds.