Chief Pricing Officer

I first met Seth Godin, the prolific internet marketeer from the early Yahoo! days, in New York City. It was midnight and we were standing next to one another at the Marriott reception counter, checking in, both fresh from the United flight from SFO. We were both speaking at the DMA conference (me on email marketing, Seth on everything). We conversed on optimizing the check-in procedures, refining the experience. Not much has changed on that front, but here he is, circa 2009, talking about pricing on his blog:

Change your pricing

When a restaurant goes from a la carte to either a buffet or a prix fixe meal, it is able to find a new class of customers.

Could a law firm charge by the project? When I incorporated Yoyodyne, a fancy firm charged us a fix rate.

Netflix went from charging by the rental to charging by the month.

We use tolls to charge people who drive over bridges more than other folks. We don’t hesitate to charge people ordering steak more than people ordering pasta in a restaurant. Could the library charge frequent readers more? What about insurance companies charging more to young families (more likely to have a baby).

Ski areas have a huge fixed cost base (land, grooming, etc.) so they get greedy, sell too many lift tickets and the lines get long. Fixed pricing encourages people to ski a lot, at peak times. What if only cost $3 to get on the mountain, plus a small charge for each lift ride and a premium price for popular lifts at popular times? The technology is already there, the only reason not to try it is momentum.

If you’re a copywriter or masseuse or other sort of freelancer, how many retainer clients do you need to relax and spend more time on the work, less on the billing/looking part? What happens when an artist does this?

Why don’t airlines experiment with auctioning of seats, baseball card style? You could buy the rights to a seat for $200 (speculating, if you like) and then try to sell it off as the flight time get closer–it’s not hard to imagine an easy to use website for these transactions. The seat might change hands a dozen times, earning the airline a processing fee each time, and enriching those that want to start trading this expiring commodity. Sports teams are already trying to figure out how to make this work.

Changing your pricing changes your story.

This entry was posted on January 6, 2009 at 4:17 pm and is filed under Pricing Insights, Strategy. Tagged: pricing, pricing strategy, Seth Godin. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.