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Price Perception

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Back in the 80's I was invited to see the new 'Which Magazine' subscription computer.  At the time I was blown away by the power - it probably had less power than a cheap modern day smart phone but in those days it was really something.

To demonstrate the speed they asked me if I knew anyone who subscribed to 'Which' and, as it happened, I did ... my mate Terry.  Sure enough Terry's details flashed on the screen within 10 seconds and I could see he was paying £6.50 a quarter and he had been a subscriber for 2 years.

I met Terry a couple of days later and related the story.  "That's wrong" he said "I only pay £6.50 annually not quarterly".  I told him I was convinced I was right and the next time I saw him he confirmed it was and he vowed to cancel the standing order.  Several years later I asked him about his standing order and he admitted that he still hadn't got around to cancelling it.

This shows two things:-

1.       To make the initial offer more appealing you could choose the lowest possible amount for a limited supply.  Chances are 'Which' offered a 3 month free trial and made the payments quarterly while most people assumed a subscription was annual.

2.       Standing Orders/Direct Debits/Continuous Authority credit cards put inertia on your side.  Ask a group of subscribers to renew a subscription and you'll be lucky to get 15%.  Put them on automatic renewal and you'll get over 60%.

So, this week perhaps it might be worth looking at how you price your products and services and if you could put them on automatic renewal.

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