

A Rule of Thumb: Pricing Should Be Simple - mrshoe
http://daringfireball.net/2011/03/pricing_should_be_simple

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e1ven
I absolutely agree with this-

I've been in negotiations with a CDN for the last week. They refused to send
me real numbers, or give me a test file.. It was "Let's set this up, and a
third party source will verify".

What's the price?

It depends on you, and what your needs will be in 9 months, and the phase of
the moon, and my mood and and and.

They ended up quoting me three different prices, each going UP because they
forgot they gave me the more basic price earlier.

Eventually, I decided to go with a competitor- Went to their website, click,
click, done. CDN is up, I'm rocking in 20 minutes.

Would I have been happier at CDN A? Maybe. But I'm not going to dick around in
sales meetings for 2 weeks to find out.

~~~
chrisbolt
Did you try telling them you're going with a competitor? That might change
their tune.

~~~
e1ven
They made themselves not worth it by their process.

By the time I went got ahold of the Sales rep again, and had him return an
email, I would have been done with the project with their competition.

------
akashs
I definitely agree that pricing should be simple, but it isn't everything.
It's also important that the pricing reflects the value of the options.

I worked on a project for a large SW company, and even though they had a
simple pricing plan, one of their products wasn't taking off. But when we did
some shopping and called in to their reps, none of them could clearly
articulate why I would want to buy the higher tier product compared to the
middle tier, and they even seemed the same on the website. The pricing was
simple, but I had no idea what I would be getting in addition if I spent more
money.

Contrast this to the iPad example, where I know exactly what I'm paying for.
Every $100 increases my storage, and another $130 gets me 3G. It's very clear.
I think cell phone plans are a great example of pricing that's complex, but
easy to understand because the value is clearly communicated (every $X gets me
X minutes). It's easier to make these decisions if I know what I'm paying for.

~~~
jacobian
You really think that your cell phone plan is "easy to understand"? What's
your monthly bill going to be this month? I'll bet if you guessed each month
in advance you'd _never_ get it right. My bill's usually within about 10% of
what I expect... until it's not and I get the pleasure of spending an hour on
hold trying to figure out what changed without my say-so. This fuzziness means
I'll _never_ be comfortable buying anything from a cell provider, and so I'll
never sign up for the $3 roadside assistance, or the $10 replacement warranty,
or whatever.

OTOH, when I click "buy" on that 99¢ app I know I'll be billed exactly $1.07
(sales tax), not a cent more or less. A

Apple's completely nailed making me comfortable buying stuff from them. AT&T
and Verizon haven't. Guess who gets my disposable income and who doesn't?

~~~
follower
> when I click "buy" on that 99¢ app I know I'll be billed exactly $1.07
> (sales tax), not a cent more or less.

Coming from a country that always includes (for consumers) tax in the
advertised price I find it amusing that "99 cents becomes $1.07" is considered
simple. :)

~~~
jacobian
Indeed - it's pretty silly that in the US apps cost anywhere from 99¢ to $1.10
depending on where your credit card's billing zip code points to. But I can
hardly hold Apple responsible for the US's lame sales tax system, and at least
Apple doesn't add a $1-$2 "wetlands recovery fee" to my monthly bill.

That's not a joke. AT&T does.

~~~
dantheman
I'm glad sales tax is broken out like that, it reminds people how expensive
the government is... imagine if people had to write a check for income tax and
not have it automatically deducted each pay period.

------
timosky
My old economics professor likes to use Scott Adams' term: a confusopoly.
([http://blogs.hbr.org/cs/2011/03/is_paul_krugman_click-
worth....](http://blogs.hbr.org/cs/2011/03/is_paul_krugman_click-worth.html))

The pricing is supposed to be complicated, so you don't pay much attention to
it.

~~~
baran
Dilbert Link:
[http://search.dilbert.com/search?w=confusopoly&x=0&y...](http://search.dilbert.com/search?w=confusopoly&x=0&y=0)

------
Ratfish
Another agreement. My pet peeve. Real-estate agents should put a price on
houses they are trying to sell. I'll either buy, or I won't. Who wants to pay
for building reports and lawyers before an auction just to turn up and realize
they can't afford the property? Agents underestimate sale price to get people
to come to auctions. And what's with silent auctions, and all their other BS.
Ask for what you want by putting a price on whatever your selling.

------
cao825
As someone who works on the pricing system for a distribution company - this
article may apply to retail, but it definitely does not apply to everything.
Our suppliers try to screw us at every turn by making us deal with complex
cost side, so we have to have an incredibly dynamic and flexible system to
deal with an international customer base.

------
afterburner
Although the point about simple pricing might have been an overwrought Apple-
specific intro, the real point is: dayum, what was NYT thinking with this
weird, expensive pricing structure? And not even a discount for getting both
subplans together?

~~~
Stormbringer
Wait... You're complaining that _Gruber_ is putting an Apple angle on one of
his articles? Do you also complain that water is wet darnit?

------
jellicle
So, first he talks about how simplicity of pricing is key. Then he describes
how an Apple Ipad, with about a dozen different prices depending on what you
want, is simply priced. Then he describes how the New York Times, which has
only one price that most people will ever care about ($15 for unlimited web
access), is unsimply priced.

True brilliance.

~~~
magicofpi
Well, the iPad's pricing is relatively simple to figure out: $499, plus $100
for every storage increase after that. If you want 3G, that's $130 extra.

The New York Times, on the other hand, seems less logical. The
website+smartphone app is $15/4 weeks, the website+tablet app is $20, all
three is $35, so the website is worth... nothing? Or, you could go with the
home delivery option, which would cost you $455 (all digital access) -$304.20
(daily delivery in NY) = $150.80 less per year, even though they have to print
all that paper.

~~~
isleyaardvark
More importantly the iPad's pricing is normal. The Nook, the Kindle, and the
Xoom all come in different versions. People expect to pay different amounts
for different hardware.

Nobody's doing what the NYT is doing. Netflix and Hulu are given as examples
of content producers that have a simple pricing scheme over multiple devices.
Lots of people use those services. The NYT pricing not only violates
expectations for online content, it doesn't even seem typical for newspapers.
Paying per 4 weeks instead of per month? Who has ever done that?

~~~
magicofpi
Yes, exactly. Perhaps the 4 weeks approach is to link it with the existing
home delivery system (which is also calculated by week), but it sounds strange
in practice.

I guess we'll see how it turns out, though. Maybe most customers won't
actually mind these irregularities.

~~~
chris_vannoy
Actually, my guess is the every-four-weeks bit is to goose revenue.

With monthly, you're getting paid 12 times a year. With every four weeks, you
get paid 13 times.

It's a nifty little sales trick. Most people (including me) automatically
round four weeks up to a month before thinking about it.

