Strategy Spotlight with Don: How Pricing Affects Sales

Pricing is no doubt one of the single clearest ways to either generate more revenue, or less. But the trick is rarely the price itself, and more how it’s positioned. Humans are naturally inclined to make choices based on the relative value of things compared and contrasted to other similar things. If you can play into the desire your consumers express to have it all, and make it simple for your customers to get it by choosing the all-in-one option, you will generate more orders, higher customer satisfaction and increase revenues.

In today’s Strategy Spotlight, Don Nicholas, Chairman & CEO of Mequoda explains how to set up pricing to achieve all of the above.

Quick Strategy Tip of the Day from Don


Finding the offer that will make you the most money was tricky even in the olden days when print was the only choice. Now you’ve got to calculate that offer for five different editions (hopefully priced for contrast in bundles!). Do you give subscribers something for free as an enticement to subscribe? Do you give them a trial subscription? Introductory price?

When selling any products, you want to have compelling benefit-driven copy and a price that represents value. But one thing that may be more influential than price itself, is how price is positioned on a page. I mean this quite literally. Placing four price points next to one another can have a very different response rate than two or three.

For most publishers, we find the lucky number to be three price points, and I’ll tell you why.

It’s not because people need less options to make a decision (which is true), but because three price points gives you the ability to price your offerings in a way that convinces customers to purchase the highest tier price point. Here’s the trick.

Most publishers assume that they should price their most valuable product accordingly:

  1. Magazine: $20
  2. Subscription website: $30
  3. Combo of both: $45

After all, $45 is still less than the combined price for both products purchased separately. Consumers will respond to that, right?

Not according to our research, they won’t. We find that 70% of buyers will pick the cheapest offer, while 10% will opt for the second-highest priced product, and only 20% will pick that $45 price – it looks like a lot of money compared to the price just below it. People just don’t want to make that $15 leap from $30 to $45.

Now, let’s adjust that highest price to take advantage of the contrast effect:

  1. Magazine: $20
  2. Subscription website: $30
  3. Combo of both: $35

Our research says the numbers of buyers shift dramatically: Now, 70% will pick the highest price! The middle price still attracts only 10% of orders, and the lowest price is the choice for 20% of buyers. And not only that: You’re also going to get more orders to boot– an additional bonus.

That makes for a dramatic increase in revenue. As you can see, making this non-intuitive pricing decision drives more customers to buy, and a much higher percentage of them to buy the most expensive product. Bottom line: The combo package generates $14,950 more for this generic publisher. That’s almost 60% more in revenue, all without changing anything other than your prices.

Want to learn more ways to increase subscription revenue? Our session, 25 Breakthrough Techniques for Generating more Subscription Revenue at the Digital Revenue Summit this spring will fill you in.

It all starts with understanding how to use a Six Sigma framework to plan, execute and analyze an ongoing series of weekly marketing campaigns that will uncover the most profitable way to market your subscriptions. In 25 Breakthrough Techniques for Generating more Subscription Revenue at the Digital Revenue Summityou’ll learn how magazines, books, courses and even events can be leveraged into subscription products that generate continuity revenue – revenue you’ve been leaving on the table until now.

You’ll also discover at the Digital Revenue Summit how to construct complex offers using price, term and incentives that will keep your revenue growing. Understand the research and economic behavior that makes contrast pricing your most powerful secret weapon for increasing revenue per subscriber by 100% and more. Do all this with case studies from publishers who are both large and small, including CountrysideYankeeThe New Yorker, Mother Earth News and Time.

Each session of the Digital Revenue Summit is suitable for use with either B2C or B2B audiences, and delivers multiple tested, proven techniques for improving your revenues. Choose one or choose them all – each one will dramatically increase your revenue, by at least 20%.

Don’t wait to register. Read through the agenda. Read the testimonials from your fellow publishers. Check your calendar. When you’re through, I’m confident you’ll be ready to register.

I’m looking forward to talking with you. Let’s chat more about your publishing business over one of the networking breakfasts, lunches or the reception that’s included with the price of your seat. Register now.


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