Designing Pricing Plans for Subscription-Based Web Apps

http://sixrevisions.com/web-applications/designing-pricing-plans-for-subscription-based-web-apps/

by jggube • 14 years ago

8 1 14 years ago

sixrevisions.com

jacques_chester• 14 years ago

The phenomenon of having products in a lineup which are never meant to sell is well known to marketers.

The exact name for it escapes me just now.

Basically, the logic goes:

1. Find a feature that is easily differentiable and cheap to create.

2. Differentiate on that feature for a relatively small markup. It'll be almost pure profit.

In software this is easy as a few named constants in your source code or some entries in a database table.

So for example, last time I looked The Economist had three subscription types:

Paper, Digital, Paper & Digital.

They priced the Paper and the Paper & Digital plans identically. Why?

Because the contrast between P/P&D made P&D more attractive. It increases sales of the P&D plan and, overall, improves the total profit on the deal.

There are many other businesses where "sacrificial lambs" are created to sell the outlying plans. As usual I refer folks to The Strategy and Tactics of Pricing for details.

Designing Pricing Plans for Subscription-Based Web Apps

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