[ARTICLE] Does price really matter?

BlackStorm · Post #1 (**permalink**) 11-01-2003, 12:23 PM

Below is a quote of the "Does price really matter?" article
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Quote:

The best example today might be gasoline prices. A gallon of gas may sell for $1.499; it will not retail for $1.50. Why not? Would 1/10 of a cent put someone off? In financial terms alone, it would not. But, round figures represent barriers to how much consumers are willing to spend, and by pricing an item below the round number, it seems significantly less expensive than the math would indicate. A buyer with a $500 budget can rationalize a $499 purchase. However I if the item was priced at $500 the buyer may fear of going over the budget. In addition, people focus on the first number in a price; what follows is factored into the decision as well, but if the initial figure puts off a potential customer, that's a lost sale.

As for specific pricing for commodities, there are two schools of thought. One relies on bargain-basement costs, undercutting the competition in hopes that volume sales will make up for the limited profit margin. The second strategy relies on the principle of "you get what you pay for", and the item is deliberately priced high in the hope that the cost will indicate high quality. Obviously, your price should cover the cost of marketing, and overhead, leaving you with some profit. Price can make a difference since there are so many competitors in the arena.

You are far better off with a small profit from a growing base of clientele than with a large margin from a few customers who might be tempted to go elsewhere because of price. Pricing is just the first part of attracting customers, marketing the solutions and their price is the next step. Stay tuned for the future article on marketing perspectives.

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Contact Address: jonathan@vovex.com

Website: http://www.vovex.com
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GordyMac · Post #2 (**permalink**) 11-01-2003, 12:32 PM

That is so true, many people would choose a host for $4.95 before a host for an even $5.00, sometimese even if the $4.95 has an extra charge for tax or something, they still might go with it.

I don't like the hosts that tell you, "you get what you pay for" and charge $5.00 per GB of bandwidth. I mean, this can be true, but most times, unless you are paying rediculous rates, you get pretty good hosting each time.

gooooogle · Post #3 (**permalink**) 11-01-2003, 01:27 PM

You have some good points here.

getyourbanners · Post #4 (**permalink**) 11-01-2003, 09:25 PM

Am going to check it on late today.

FastNetServers · Post #5 (**permalink**) 11-25-2003, 03:01 PM

Well I would agree with Gordy to a certain extent because most of the consumers today are well aware of a lot of hidden charges with the very cheap hosting companies hence before signing up they ask a lot of questions and some proof to confirm it.

Nurples · Post #6 (**permalink**) 11-25-2003, 05:33 PM

I just made a post on this very topic...

http://www.hosting-talk.net/showthre...=&threadid=403

I think that it is better to go with the cheaper host as long as you research first. Some host are just in this bussiness to try to get rich fast. They don't concider anything else, like quality, support, and what they will do 6-12-24 months down the road when they don't want to do it anymore.

getyourbanners · Post #7 (**permalink**) 11-25-2003, 06:12 PM

Quote:

Originally posted by Nurples
I just made a post on this very topic...

http://www.hosting-talk.net/showthre...=&threadid=403

I think that it is better to go with the cheaper host as long as you research first. Some host are just in this bussiness to try to get rich fast. They don't concider anything else, like quality, support, and what they will do 6-12-24 months down the road when they don't want to do it anymore.

Welcome board Nurples

GamesCreation · Post #8 (**permalink**) 11-25-2003, 07:35 PM

An interesting read

It's surprsing how often the trick of taking $1 (or £1 in my case) off a price is used. And I have to say, I often fall for it. I tend to look at the first digit as the most important, and feel a lot better about buying something that would be £199 rather than £200. Just like I think 7:59 is a lot earlier than 8:00 even though its only a minute difference.

This trick is often used so the companies can say 'Hosting under £5 per month' or something.

I personally prefer to pay by year. I'd rather pay a large sum £49 odd and forget about it for a year, than pay monthly.

I agree with the fact its good to do a lot of research first though.

Nurples · Post #9 (**permalink**) 11-25-2003, 09:55 PM

Quote:

Originally posted by getabanners
Welcome board Nurples

Thanks!

Glad to be here.

FastNetServers · Post #10 (**permalink**) 11-25-2003, 10:15 PM

Welcome aboard Nurples..

getyourbanners · Post #11 (**permalink**) 11-25-2003, 10:19 PM

Well I would agree with Gordy

grace5 · Post #12 (**permalink**) 11-28-2003, 04:22 PM

Quote:

You are far better off with a small profit from a growing base of clientele than with a large margin from a few customers who might be tempted to go elsewhere because of price. Pricing is just the first part of attracting customers, marketing the solutions and their price is the next step. ...

Not everyone wants a "walmart priced host",some would rather pay and extra $12-25 yr (1-2 per month) and KNOW that they have a better provider and experince has taught them that price is not 1st on the list,if you are paying $3.00 p/month for 250 mb and site is up and then down (yoyo hosting.com) how much are you saving?
By the same token a pricer host does not mean that they are a good host...
service is what should be #1 for the provider and the customer.

there thats my 2 cents ...(err rather $2.00 worth!)

imported_M6.Net · Post #13 (**permalink**) 12-17-2003, 09:57 PM

Recently I have read an article "Mind Your Pricing Cues" by Eric Anderson and Duncan Simester in Harvard Business Review, September 2003,

which shows "The Surprising Effect of a 9" and per the article

"Customers react favorably when they see prices that end in 9. For instance, when a national women's clothing catalog raised the price of one of its dresses from $35 to $39, sales jumped up. But, when the price was raised from $34 to $44, there was no change in demand."

Note: all words/letter or phrase in "" are from the article and not my words/letter or phrase.

If anyone interested in reading this article can purchase it from here