A Reminder: Lower Prices Can Make You More Money
from the hello-price-elasticity dept
ShareMouse is $25, and Rafe thought it was too expensive, and suggested that the developer would make more money by lowering the price. But the developer, Gunnar Bartels, pushed back and convinced Rafe otherwise. First he argued that his product was better than the alternatives. Second, that lower price would lead to more support costs from less sophisticated users. And, finally, he pulled out the "developers gotta eat" card -- which doesn't make much sense if you actually can make more money by lowering the price. In the end, Rafe was convinced that perhaps Bartels had a point.
Except, now, months later, Bartels did experiment with lowering the price... and all of his arguments and assumptions fell apart.
For kicks, he offered a one-day $10 sale on Sharemouse.As for those concerns about the massive onslaught of stupid support questions? That didn't happen.
“Holy cow!” Bartels wrote. Translation: He sold more licenses than the elastic pricing model predicted.
Part of the success of the trial can be attributed to the valuable marketing and promotion that came with the CNET post. Even so, Bartels says the sales figures were “overwhelming and surprising.” So he’s now planning on bifurcating the ShareMouse product line.
Bartels says that the expected downside of selling at the lower price, higher support expenses, has not borne out. “Maybe our product is so good,” he says.