What is this price list telling us?

This is a screen shot of the price list for obtaining ISBN numbers. Which version do you believe is their most popular one?
Take a look at this and see if you agree with my readings of this

On the technical side, this is a case of non-linear pricing. That is the price per unit decreases as the volume of units purchased increases. The first ISBN costs $125 but  1000th ISBN costs only $1. The reasons are many fold, decreasing utility to customers, alternatives available when you are buying that many ISBNs, etc.

The more interesting aspect is the price points of  single ISBN vs. 10 ISBN. Why is a single ISBN priced at $125 but  ISBNs are priced only twice as much?
Which version do you think is more popular – the single ISBN or the 10 ISBN version?

As with any pricing scenario let us start with the customer segment than the product. These two prices tell us more about the customers they are targeting and the version they are nudging their customers to buy.

Who buys ISBN by going to a self-serve website? More specifically who buys just one ISBN?

The first time writers looking to self-publish their books. They come with an idea and unshakeable hope that this book is going to be a hit. No ISBN? No hardcover book!

The price $125 must have come from an analysis of these self-publishing authors and their willingness to pay and wherewithal to pay. After all there are alternatives like going with Kindle publishing that requires no ISBN number.

But why stop with $125 when you can get another $125 at no incremental cost? Take a look at what the website says below the price list

The customer has already made the decision to buy the first ISBN now if you sell them the hope that they could be producing more books in the future you are able to capture incremental value with little or no cost to you.

Surely every first timer has at least one more book left in them or at the very least they could be releasing soft cover version of the same. Hence the second version that offers 10 ISBNs for the same price it would cost to buy the second ISBN.

Given these two options it is highly likely that most customers buy the $250 bundle.

If one price is good, two are better!

So why aren’t  there versions that offer 20, 30, 200-900? 

Note: May be price list is not telling us any of these points and it is just that  am primed to see these readings from price lists.

Pricing A Service With Limited Customer Lifetime

Match.com is running a promotion for its service, “If you do not find your special someone in six months, your next six months is free”. Simple and elegant plan that may on the surface seem to give away too much and yet captures the full lifetime value of a customer.

If a customer did find the special someone, there is no reason for them to pay for the next six months. If they did not, then they may still be less  likely to continue to pay for a service that is not meeting their expectations. The marginal utility of the service to a customer decreases as the time progresses and at some point the service adds no value to a customer. In other words, the lifetime of a customer is limited.

For any product or service with decreasing marginal utility that approaches zero, the pricing should capture all the value upfront and give away additional units at marginal cost.

For Match.com, the marginal cost of serving a customer is $0. So a pricing scheme that charges $60 for six months with additional six months free is better than a scheme that charges $60 for an yearly subscription.

There is one additional factor in the pricing of match.com, customer margin. The likelihood of  a customer staying on after six months, intuitively, is very low. But if they stayed on, there are opportunities to make incremental revenue in the form of selling other products and help build critical mass to attract new members. This  turns a cost activity into a revenue opportunity, squeezing  extra profit from the limited lifetime of a customer.

I think Match.com is practicing effective price management with a clear understanding of consumer behavior and lifetime value of customers.

How do you price your offering when the lifetime of a customer is limited?