A powerful pricing secret

I used to do music with a former carnie named Midnight. He’d run the sound and lights and I’d rap. I was a Hare Krsna monk for most of this, so we made quite the pair.

Midnight would chow down on ding dongs and Doritos and down No Doz as we drove from gig to gig. I would eat pure, clean vegetarian food first prepared and offered on an alter.

One year we did a gig at a karaoke bar in Davenport, Iowa. You knew it would be rough when we pulled up and they had a vending machine outside it that had fishing bait.

The next year we went back not to perform but to enter Midnight in the concert. See, Midnight looked and sounded like Rob Zombie. The other two finalists were both girls doing country songs.

Boring.

So Midnight won because he stood out.

When I got into business, the music faded. So did my devotional service. Midnight got me to do something I hadn’t done in years. Go to a movie theatre.

In the lobby Midnight schooled me on the snacks. He showed me how the large popcorn with the large drink (and unlimited refills!) was such a damn good deal because it was only fifty cents more than the medium but got you twice as much.

That’s the power of tiered pricing.

Instead of focusing on how much something cost, you focus on the value of it vs. the other immediate options next to it.

Now I think the movie theaters use it in a predatory way to trick people into buying over priced stuff - but you can use it in a way that makes your good deal an obvious good deal.

Case in point. My wife bought a Porsche hybrid and has never once charged it or cared for the electric part of the vehicle.

She bought it because it was only a bit more than the regular model but almost had the same power as the turbo model.

The turbo model was like twice as much as the regular model, whereas the hybrid was only about 25% more above the regular.

I wonder if Porsche did that intentionally.

If not, they should.

Once we had a software. We made three tiers - the personal, the power and the agency versions. The personal got you 4 licenses for $50. The power level was 10 licenses for $77. The agency was $97 for 25 licenses.

But then on a webinar I’d double the licenses for the next 72 hours. Now it’s 50 licenses for $97. Then I’d take it a step further - double it again if you bought before the end of the webinar.

The conversions on those webinars were insane.

You’d get 100 licenses for $97 - less than a buck a license… vs. $77 for 10 licenses ($7.70 per) or 4 licenses for 50 ($12.50 per). And the agency licenses allowed usage for clients whereas the others only allowed it on sites you owned.

I’ve used tiered pricing strategy on over a dozen offers for myself and clients. It doesn’t always work. Sometimes it completely backfires because when you give more options you can confuse your consumers.

But it’s worth trying because when done right… you knock it out the park.