I heard this from Jonathan Stark at Ditching Hourly – and it explains pricing brilliantly.
He said that, after speaking at conferences, he often ends up at an airport about 50 miles away from his house. This gives him a number of options for getting home.
The cheapest – walk home. It’s free
Take a bus – they’re only every hour and they’re often crowded, but a ticket is only about $12.
Take a taxi – warm, no sharing and door-to-door service – from the airport to his house, it’s about $250.
Take a helicopter – get home in no time at all, but it costs $2000 minimum.
When you think about your own pricing you always have a tendency to think that people are only going to go for the cheapest option. But look at that list above – are you really going to walk 50 miles? There are many reasons that people choose the price points they do – the helicopter pilot may not get many customers but they do get some.
Take Action: Are you assuming that your customers will always want the cheapest option? What can you add that will push them up a price level?