Pseudo-Socialist Pricing

Here is a fantastic and funny pricing situation from a friend.

Hi Mark,

I recently got my curb number repainted by an outfit that allows you to name your price. I thought you’d get a kick out of their complicated pseudo-socialist price list. FYI, I ended up ignoring all this and writing a check for $30.

You may want to read their flyer, but you definitely want to read their yellow price list. I’ve never seen one like it.

OK, their heart and intention is in the right place. They are trying to offer a lower price to the less fortunate and offering an opportunity for rich people to help out. They are attempting to do price segmentation. However, this could use some work.

One piece of data, every house in the neighborhood where my friend lives is worth multiple millions of dollars. (Of course, it’s in California.) It’s unlikely anybody living there is “economically disadvantaged.” Still, let’s pretend there are some. We could still do a better job.

I see three big problems with this price list.

  1. There are too many choices. A much better alternative would have been three choices: good, better, best.
  2. The cash or check column seems unreasonable. I especially like that you have to pay $10 more to write a check at the higher prices and only $5 more for a check at the lower prices. I’m guessing they prefer cash for convenience or for tax purposes. A simpler and cleaner method would be to say, “We find it challenging to make it to the bank during working hours. We greatly appreciate cash and offer a $5 discount for cash payments.”
  3. The entire thing looks unfair. I show a cartoon in class where there is a store counter and a sign that says “Rich people, $10. Everyone else, $5.” That’s exactly what they are doing here. Nobody wants to pay more because they are rich.

If I were creating this price sheet, I would make it say something like this.

Curb painting $50. If you are unemployed, please take a $20 discount.

If you would like to see your entire neighborhood with clean curb numbers, please donate an additional $25 (or something else). We will paint as many curbs as we can afford.

There is no way to know if my method would work better, but it sure seems simpler and fairer. And … I’ll bet my friend would have paid the $50.

Mark Stiving

Mark Stiving

Mark Stiving is an instructor at Pragmatic Marketing with more than 20 years of experience in business startup, development, management, turnaround and sales and design engineering. He has helped companies create and implement new pricing strategies to capture more from the value they create, and has consulted with Cisco, Procter & Gamble, Grimes Aerospace, Rogers Corporation and many small businesses and entrepreneurial ventures. He has led pricing initiatives as director of pricing at Maxim Integrated and as a member of technical staff at National Semiconductor. Mark also has served as president of both Home Director Inc. and Destiny Networks Inc. and as an assistant professor of marketing at The Ohio State University. Mark also is the author of “Impact Pricing: Your Blueprint to Driving Profits” (Entrepreneur Press, 2011). He can be reached at mstiving@pragmaticmarketing.com.


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