Brilliant Price Segmentation – An Example
Think about your customers. What is different about the ones who are willing to pay more vs the ones who need a low price to buy? How can you charge one group more than another? Keep thinking. There are more ideas you haven’t thought of yet.
Here is a brilliant example. Customers who are price sensitive probably comparison shop. Customers who are not price sensitive probably just decide what they want and buy it. In the world of Internet retail, you can tell these customers apart (at least statistically).
This became clear after reading this blog from Upstream Commerce. In it, Gilon Miller points out that you can tell how your website visitors arrived at your store. If they came from a price comparison site, then they are probably very price sensitive so we want to price more aggressively. If they came from a product review site, then they probably already know they want our product and are much less price sensitive. Let’s charge them full price.
This is a wonderful example of price segmentation based on transaction characteristics.
You probably didn’t think up this one on your own (I know I didn’t). There must be thousands more opportunities for price segmentation out there. Keep thinking.
Mark Stiving, Ph.D. – Small Business Pricing Expert
Photo by Brian Watkins