When customer demand is known, go for multi-version pricing

Market Place reports on the multiple different ways one can watch the new Hobbit movie.

Burbank AMC 16: You have the IMAX 3D which is in the High Frame Rate, regular 2D, ETX 3D which is not High Frame Rate but it is mastered for Dolby Atmos, and then you have regular 3D.

Previously we have seen about movie theater pricing and how they do not have a way to charge different price for different movies nor do they have an easy way to charge more for the rabid fans and less for others. The choice dimension that customers value different seem to be – time, place, or format and not content. Hence we see the different pricing for different show times, different theaters, 3D, IMAX etc.

Hobbit producers are employing the different content dimensions to offer different experience to customers at different price points.  If one price is good, four seems to be better.

Does that mean every movie producer can take advantage of this and offer four different ways to watch their movies?

The answer is in the same Market Place story

in a case like “The Hobbit,” a movie that people are going to watch no matter what, it makes smart business sense to offer a range of viewing experiences at different price points.

That is there exist demand for the content and the producers have validated this and are simply maximizing profit by allowing customers to self-select themselves to the format they want to experience and pay for. If there is no demand, adding versions that differ on a choice dimension won’t cut it.

Now about those pricing pages that list three editions. Without an understanding of your customers and without validating customer demand for the product, simply introducing three or four editions (versions), modeling after some other popular business will not create instant demand for your product.

Where do you start for your pricing?



2 thoughts on “When customer demand is known, go for multi-version pricing

  1. Two interesting instances of pricing I recently came across.
    1. 100 g of a brand of tea costs Rs. 30, 500 g of that same brand costs Rs. 167. (identical refill packing) We would expect the bigger to pass on some discount compared to the smaller ones (500 g vs 5 x 100 g). The shopkeeper attributed this reversal to just ‘oversight’. But as this is a big brand (Unilever), I think they are probably targeting 2 different customer segments but still the strategy is not entirely clear.
    2 A brand of OTC cough syrup containing salbutamol and ambroxol costs about Rs. 45. There is an ambroxol-only version of the same cough syrup that costs Rs. 52. Both contain the same concentration of ambroxol (30 mg/5 ml) and the volume of the bottle is same too (100 ml) and date of manufacture and location are same as well. I could not understand how adding an extra component can lower the price! (and why??). I was probably the only one who would have checked so closely, so I don’t think its about relative pricing to make people choose the cheaper combo.


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