Pricing Long Sleeve Vs. Short Sleeve

Price: $98
Price: $119

WSJ is now selling bike jerseys. More than the design what is interesting is their decision to offer two versions at two different price points. Short sleeve at $98 and long sleeve at $119. This is an effective versioning strategy, recognizing that different customers have different  needs and willingness to pay. They created two versions at two different price points to match the segment’s needs and capture value. If one price is good, two are better.

This type of versioning is what I describe as vertical product line extension.  Another option for WSJ would’ve been to introduce multiple different designs (say with different “news stories on the jerseys”). That is horizontal versioning.

Marketing studies show customers’ willingness to pay varies along the vertical dimension and does not vary along the horizontal dimension.

What does it mean to a marketer?

Versioning can translate into multi-price points and higher profits only if the value to the customers varies across them. Simply creating multiple colors is not versioning. Each customer has different willingness to pay but a marketer cannot capitalize on that through horizontal versioning.

2 thoughts on “Pricing Long Sleeve Vs. Short Sleeve

  1. Good observation. They did, but it had different h/w configuration as well, so it was vertical with a horizontal variation. I am not sure how much more would customers have paid for a black version that is exactly same as the white version.
    That said, brands do limited editions, like the Product (RED) and Livestrong laptop by HP etc. They usually changed other features or added unique features that were not available. It is difficult to say whether color or other horizontal extensions contributed to customer willingness to pay.

    I also have doubts whether the WTP results I quoted hold true for vanity products (conspicuous consumption).
    -rags
    ps: thanks for your note on the blog.

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  2. Apple used to charge more for the black MacBooks as compared to the white ones. Wouldn´t be that an example of “horizontal versioning” in which customers´ willingness to pay does vary?

    On another note, congrats for your blog. Rigorous, neat and engaging.

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