Tiered Pricing Gone Wrong

Thursday, October 30, 2014

Tiered pricing is an excellent tactic for selling goods and services. Typically a handful of offerings are advertised in such a manner that allows a customer to select the one that best meets his needs and ability to pay.

Its use is so prevalent that many expert marketers divide businesses into two types:

  1. Those that use tiered pricing
  2. Those that don't

Just today I came across a third type of company. It both uses tiered pricing and does not use tiered pricing. Its pricing strategy was based not upon behavioral economics (as I recommend) but rather on quantum mechanics - an idea that had previously escaped the limits of my imagination.

This firm's sales page utilized traditional tiered product segmentation, but hid its prices behind a get a quote button. That's right. It broke its service packages into tiers with specific details, but did not price any of them out.

Let me be the first to say that this is utter insanity. Somehow, for some reason, this company has taken the most customer-hostile aspects of tiered pricing (forcing customers to pigeonhole their needs into predetermined offerings) and enterprise pricing (preventing customers from comparing prices of different offerings). The result was an unholy pricing disaster that needs to be killed with fire.

While professional courtesy prevents me from outing the identity of this young SEO firm from south Florida, I must say that I am both amazed and awed by its ingenuity. The novelty of its approach went beyond what I described and went further still. Upon investigation of its website, I realized that each order now button associated with a given package transported potential customers to a generic contact form. This contact form again requested that the potential customer select from a list of service offerings. Interestingly, the packages listed on this page differed from those on the prior page and had no descriptions.

Clearly, this is a case of tiered pricing gone wrong. My advice for getting it right? Take a look at Charge Like a Rhino: The Software Pricing Handbook or contact me for a pricing consultation.