Don't Be Afraid Of Going In High

Had an awesome reminder today of the vagaries of pricing policies.  I was buying for a change, some sms-cum-bluetooth advertising stuff as it happens for a consumer venture of mine.  The technical service providers and I were discussing how much to pitch the text message at.  You’ll have seen the kind of thing, although in a different context, on crappy telly quizzes that put up the most ridiculously easy questions.  Here’s an example I made up just now to illustrate:

“When a salesperson asks for an order, it’s known as a……

A) Shut

B) Close

C) Open

TEXT A, B or C to 8nnnn etc etc etc…”

One thing I learned by the way was exactly how outrageous the mobile network operator’s blatant profiteering is.  As an aside, you know the quiz always says something like “charges are £1 plus standard network rate”, well, the greedy scammers take not only their ‘standard network rate’, but also around 45% of the poor creative/content providers cash.  Disgraceful.  But I digress, the selling reminder is this:

We were tinkering around with how much the cost should be, and rather than thinking hard about things like price elasticity theorem and the like, were basically weighing up the merits of £1 or £1.50.  The former being possibly a psychologically accepted level, the latter the maximum allowed within UK legislation.  And then one of the guys (called Juell) said:

“why not make it £1.50 to start with, as you can always change it to £1 later, after all, it’s easy to drop your price after launch, but often impossible to raise it”

So there you have it, another example of going in at a level which allows the market to make your decision for you, rather than the other way around, whilst maximising margin protection.  I whince at how often in the 90s I quoted for a big software solution, realising later I should have built way more in to my “initial preliminary exploratory guideline prices”…. and not been too concerned about pricing myself out of the buyer’s early deliberations 😉