6 Dec 2010

How to Get Your Customers to Pay You a 25% Premium

Create_itinerary_-_air_new_zea

Air New Zealand's new pricing model reflects recognition of the growing market share of low cost carriers.  The flexible pricing means you can decide what flying experience you want and if it's worth the price tag, through i'm sure the air crew will be just as nice to you regardless of how much you spend on your ticket.


The message is clear: Price should not be the reason you decide not to fly with Air New Zealand on their uber-competitive domestic, Trans-Tasman and Pacific Routes. The competitive angle aside, this demonstrates how Air New Zealand are listening to, and catering to their customers' needs and zeroing in on an airline industry opportunity worth 10.6 billion.


Remember the last time you were in IKEA and got that great furniture deal because you were willing to pick it up and assemble it yourself?

In the UK, electronics retailer Kogan now offers shoppers the choice of buying goods at different points in the manufacturing cycle.


You pay a premium for the added convenience as the product moves through the manufacturing and shipping process.  A great deal or a marketing ploy? Time sensitive deals are compelling, which is one reason why daily deal sites are so popular.   You decide.

 

With services,  I think these transparent pricing models actually make more money for the companies behind them not because more people are accessing product at the lowest price point, but rather, because the customers become aware of exactly what they are missing out on and choose to upgrade their service level.  We can't resist a bargain or a little pampering.


Developers are giving away their iPhone, iPad and Android applications away for free.  Then, once you are sufficiently engaged, they provide you with in-app opportunities purchase upgrades, new levels or add-ons to enhance the experience.  This reminds me of one time I was flying with Virgin America.  The provided the TV screen and I could watch trailers,  but  I had to pay a premium in order to watch a movie.  For me it was worth it, to enhance the inflight-experience.


Miele are selling a AU$16,000 freezer “Crafted using only the highest-grade materials and cutting-edge cooling technology, this first-class large capacity freezer presents elegant, European design combined with the American concept of larger capacity and user convenience,”

How can you resist?