<story><title>A Common Pricing Mistake</title><url>http://thinktraffic.net/most-common-pricing-mistake</url></story><parent_chain><item><author>tfinniga</author><text>There is also a danger to trying to extract an amount of money as close as possible to the value from each customer.  The difference between the value the customer receives and the amount they pay usually turns into good will towards the product, and in turn how likely they will be to recommend it.&lt;p&gt;If you&apos;re going to have different pricing tiers, the higher tiers need to ostensibly have more work put into them.  You can&apos;t just say that if you fit into one bucket of people we know you have more money, so we&apos;re going to charge you more (e.g. DVD regions).  You need to give them something more for it, so that your customers don&apos;t hate you (e.g. HD movie downloads).&lt;p&gt;Nobody likes to feel like every possible penny is being wrung out of them, or that they&apos;re being unfairly targeted to pay more.  Measuring happiness of customers or how likely they will refer others is more difficult than measuring which product each customer bought, but just because it&apos;s harder to measure doesn&apos;t mean it&apos;s less important.</text></item></parent_chain><comment><author>jere</author><text>&amp;#62;If you&apos;re going to have different pricing tiers, the higher tiers need to ostensibly have more work put into them. You can&apos;t just say that if you fit into one bucket of people we know you have more money, so we&apos;re going to charge you more (e.g. DVD regions). You need to give them something more for it, so that your customers don&apos;t hate you&lt;p&gt;See, I used to think this until I heard a talk by Kendall Miller in which he described his pricing experience.&lt;p&gt;He had an enterprise tier that was orders of magnitude more costly than the other tiers. Executives would skip straight over the other tiers and buy the enterprise level happily. Customers would come to him and say &quot;I love you guys! You really &lt;i&gt;understand the enterprise&lt;/i&gt;.&quot;&lt;p&gt;That tier &lt;i&gt;did&lt;/i&gt; have extra features, just like you&apos;re encouraging. But the punchline is Miller logged the use of every feature and discovered not a single one of his enterprise customers was using the extra ones. They simply wanted to pay more.</text></comment>
<story><title>A Common Pricing Mistake</title><url>http://thinktraffic.net/most-common-pricing-mistake</url></story><parent_chain><item><author>tfinniga</author><text>There is also a danger to trying to extract an amount of money as close as possible to the value from each customer.  The difference between the value the customer receives and the amount they pay usually turns into good will towards the product, and in turn how likely they will be to recommend it.&lt;p&gt;If you&apos;re going to have different pricing tiers, the higher tiers need to ostensibly have more work put into them.  You can&apos;t just say that if you fit into one bucket of people we know you have more money, so we&apos;re going to charge you more (e.g. DVD regions).  You need to give them something more for it, so that your customers don&apos;t hate you (e.g. HD movie downloads).&lt;p&gt;Nobody likes to feel like every possible penny is being wrung out of them, or that they&apos;re being unfairly targeted to pay more.  Measuring happiness of customers or how likely they will refer others is more difficult than measuring which product each customer bought, but just because it&apos;s harder to measure doesn&apos;t mean it&apos;s less important.</text></item></parent_chain><comment><author>nathanbarry</author><text>In an interview for my new book I asked Jason Fried of 37signals why $150/month was their highest price plan for Basecamp. Since I think plenty of large companies would pay at least double that.&lt;p&gt;His response was something similar to what you said about not feeling the need to make every bit of money possible. The Basecamp prices felt right to him and he was comfortable leaving money on the table to stick with pricing that matched his gut feeling.&lt;p&gt;That&apos;s not exactly what you were talking about, but I liked his way of thinking.</text></comment>