I have written a lengthy post about product pricing in the past, but today many different commercials and product prices have got me thinking.
I believe that almost whatever you think about pricing doesn’t really matter. That’s quite a bold statement, but if you think about different things that people buy: couple of bucks for bottled water, $5ish for hamburger meal, $100 for a pair of shoes, $1000 and more to be able to watch more commercials from a thin box. Would you think that these prices were based on the costs? No, they were based on what people were willing to buy.
People are paying ridiculous sums for different goods, so why wouldn’t it be possible to price your product much higher than it currently is? If somebody is willing to spend $25 for a new movie, but cannot spend $10 for a webhosting – something is wrong.
That’s the reason why seller’s opinion about the price is not the most important factor. Naturally there are factors that affect in pricing (such as “industry standards” for certain products), but much more important factor is what the buyer is ultimately willing to spend. I think we should learn from other industries. Look at what kind of price tags cloth stores (for example) are using. Are they using only $10 or $20 prices? No. Besides low-end prices, there’s lots of stuff that costs more like hundreds of dollars. If a cloth store can put a $500 price tag for a coat, why couldn’t you put $500 price tag for your services? Or $5000 or more for that matter?
For individual games it’s tough to price more than $20, but as as Halo 3 taught, the game price can be much more than an average price – sometimes lots of more.
Think about it. Think about choosing a price that’s determined buy what the buyer is willing to pay – not what you think he is willing to pay. Think about different industries. Compare prices of hamburgers with the price of your product. Are they worth much more than couple of hamburgers?
If so, let it show in the price tag.