Evaluating a Pricing Strategy
Check this out!?GBB (Good Better Best)?strategy but they took the “best” version and physically placed it in the middle. I sent it to the team. Pretty clever given people tend to buy in the middle… What are your thoughts?!
My thoughts:?Whenever we see a company do something out of the ordinary, it’s worth thinking about. What are they trying to do??How do we think shoppers will respond??Of course, I don’t know the answer and would love it if someone from rvtrader.com shared the results with us.?
Obviously, the company is trying to get more people to buy their best package.?By placing “best” in the middle, highlighting it in yellow, and putting “popular” at the top, they want people to consider this option seriously.?I bet a higher proportion of buyers buy the highlighted version than before they used this tactic.?So far, so good.??
However, it also probably caused some people not to purchase anything.?One of the beauties of GBB is that “better” is the safe package. People don’t want to make a mistake.?They are afraid if they buy “good”, it may not be good enough.?If they buy “best”, they may be wasting money.?By highlighting “best”, some buyers get confused, and … confused buyers don’t buy.??
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If we assume what I said was true, then rvtrader will get more revenue from a higher proportion buying “best” and less revenue from fewer buyers overall.?This is a successful pricing strategy if their overall revenue (really profit) is higher.??
Here are two alternate strategies they could have considered.??
What do you think is going on??What would you recommend???
Now, go make an impact.?
It does seem like "Enhanced" is being wasted - it's just not featured attractively - so a higher premium could replace it in the display with no loss of sales. The whole display seems anti-customer (not the way customers have learned to shop) so I think customers will tend not to buy; they, like all of us, see the display as some clever trick that they don't understand. I, too, don't understand it!
Strategic pricing Specialist I MBA I PMP I SAP SD, VISTEX, Vendavo, Catalyst, Python, SQL, Power BI l Helping businesses optimize prices & profit
2 年Absolutely, I would "add a much bigger package at $500.?Then the current $249 package would be the safe choice in the middle.?" , As Prices are relative. sharing a similar post seen elsewhere:
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2 年The enhanced has to go. The price and value is difference is massive and goes against how people see and compare good better best. There are better ways to do this and better way to show value.
Working at the final level with post-MBA methods to optimise organisational decision-making and managerial efficiency advancing corporate marketing governance, strategy, and planning results.
2 年How true is the philosophy, "Price is something customers focus on when you give them nothing else to think about"? Applying the science of product categorization, we know that: * In B2B and B2C, some product categories are price-sensitive, while others are not... Here is an infographic that demonstrates whether or not price competitiveness is a key factor in decision-making in some B2B categories...
Pricing Expert @ Impact Pricing | Speaker, Author
2 年How about Massive Marginal Value pricing? :-)