The Truth About Pricing(gobignetwork.com)
gobignetwork.com
The Truth About Pricing
http://www.gobignetwork.com/wil/2008/9/30/the-truth-about-pricing/10270/view.aspx
2 comments
GoBig usually drives me crazy, but this is really good advice.
Except they don't really explain how to "try everything". Common advice is that you can't change pricing too much or too often or people will get wise/angry.
The easy way around that is by "grandfathering" people who are already paying what you thought they should pay for your service/product; then charging people who have never seen your service before the new price.
That's easy for 1 price switch. It get's pretty crazy if you're doing constant experimentation.
True. Useful advice would have told us how to test. (limited time specials, starting multiple price categories, selling under different brand names, etc.)
At Swapalease we tried different offer combinations on our payment page including price ranges, price/offer packages, and free trials. Pretty much every price and feature combination you could think of. The point was that we needed to actually put those offers out there in order to understand what the market was truly ready for. When we ran surveys we basically got "we want to pay nothing". If we had gone off that feedback alone, we would have had a completely unrealistic idea of what the true price points would be. Instead we settled on $99 because we found that when an ACTUAL customer (not a survey responder) went to post their vehicle, that was the price point that had the highest take rate.
In regard to HOW we did it, we simply posted the pricing on the payment page. Prior to the payment page you only had to list your year/make/model to start your listing. We then tracked the number of people who went to the FIRST page (year/make/model) versus the number of people who went to the payment page (where the offer was presented) and got a sense for what offers had the highest conversion.
If you put in your year/make/model the idea is that you have interest. So theoretically the same person interested in listing their vehicle for free and the one listing for $500 are going to click to the next page. If we had presented price on the first page we would not have known whether users were bailing on the price or their intent.
In regard to HOW we did it, we simply posted the pricing on the payment page. Prior to the payment page you only had to list your year/make/model to start your listing. We then tracked the number of people who went to the FIRST page (year/make/model) versus the number of people who went to the payment page (where the offer was presented) and got a sense for what offers had the highest conversion.
If you put in your year/make/model the idea is that you have interest. So theoretically the same person interested in listing their vehicle for free and the one listing for $500 are going to click to the next page. If we had presented price on the first page we would not have known whether users were bailing on the price or their intent.
Thank you for pointing that out.