A Rule of Thumb: Pricing Should Be Simple | Hacker News Reader

A Rule of Thumb: Pricing Should Be Simple

daringfireball.net

81 pointsmrshoe27 comments

I absolutely agree with this-

I've been in negotiations with a CDN for the last week. They refused to send me real numbers, or give me a test file.. It was "Let's set this up, and a third party source will verify".

What's the price?

It depends on you, and what your needs will be in 9 months, and the phase of the moon, and my mood and and and.

They ended up quoting me three different prices, each going UP because they forgot they gave me the more basic price earlier.

Eventually, I decided to go with a competitor- Went to their website, click, click, done. CDN is up, I'm rocking in 20 minutes.

Would I have been happier at CDN A? Maybe. But I'm not going to dick around in sales meetings for 2 weeks to find out.

Wow, yes. Another pet peeve of mine is just websites with no prices on them. You click, and arrive at a web contact form or phone number with "our sales associate will be happy to help!". No, goddamnit. I don't want to and don't have the time to get schmoozed by your associate. That's okay for one off, large, custom deals but for your daily routine sale, this is not okay. I'm just about to make a decision, and now it finally hinges on the price. I lack information on your product. The other one wins.

Did you try telling them you're going with a competitor? That might change their tune.

They made themselves not worth it by their process.

By the time I went got ahold of the Sales rep again, and had him return an email, I would have been done with the project with their competition.

I definitely agree that pricing should be simple, but it isn't everything. It's also important that the pricing reflects the value of the options.

I worked on a project for a large SW company, and even though they had a simple pricing plan, one of their products wasn't taking off. But when we did some shopping and called in to their reps, none of them could clearly articulate why I would want to buy the higher tier product compared to the middle tier, and they even seemed the same on the website. The pricing was simple, but I had no idea what I would be getting in addition if I spent more money.

Contrast this to the iPad example, where I know exactly what I'm paying for. Every $100 increases my storage, and another $130 gets me 3G. It's very clear. I think cell phone plans are a great example of pricing that's complex, but easy to understand because the value is clearly communicated (every $X gets me X minutes). It's easier to make these decisions if I know what I'm paying for.

You really think that your cell phone plan is "easy to understand"? What's your monthly bill going to be this month? I'll bet if you guessed each month in advance you'd never get it right. My bill's usually within about 10% of what I expect... until it's not and I get the pleasure of spending an hour on hold trying to figure out what changed without my say-so. This fuzziness means I'll never be comfortable buying anything from a cell provider, and so I'll never sign up for the $3 roadside assistance, or the $10 replacement warranty, or whatever.

OTOH, when I click "buy" on that 99¢ app I know I'll be billed exactly $1.07 (sales tax), not a cent more or less. A

Apple's completely nailed making me comfortable buying stuff from them. AT&T and Verizon haven't. Guess who gets my disposable income and who doesn't?

> when I click "buy" on that 99¢ app I know I'll be billed exactly $1.07 (sales tax), not a cent more or less.

Coming from a country that always includes (for consumers) tax in the advertised price I find it amusing that "99 cents becomes $1.07" is considered simple. :)

Indeed - it's pretty silly that in the US apps cost anywhere from 99¢ to $1.10 depending on where your credit card's billing zip code points to. But I can hardly hold Apple responsible for the US's lame sales tax system, and at least Apple doesn't add a $1-$2 "wetlands recovery fee" to my monthly bill.

That's not a joke. AT&T does.

I'm glad sales tax is broken out like that, it reminds people how expensive the government is... imagine if people had to write a check for income tax and not have it automatically deducted each pay period.

No I don't. As mentioned above, I think cellphone plans are incredibly complex. But typically it is clear what the difference is between the $40 plan and the $50 plan (usually some amount of minutes). I know I pay $30 for data. I know I pay $15 for texts. At least I know what I'm getting, and I can decide if I want to spend the money. And even when they're wrong they typically have some sort of basis for what they're incorrectly charging. In the software company example I gave above, even their own sales people could not articulate why I should pay for the higher product / what I would get.

And for what it's worth, my monthly bill is usually the same with Verizon. I did however have those same headaches when I was on AT&T.

I have a simple cell phone plan. It's called Ben (http://www.ben.nl) and it's a subsidiary of T-mobile in the Netherlands that's historically (since the 90s) been the simple cell phone plan provider.

Here's what I pay: €3/month for 50 minutes or texts and €9.95 for unlimited data. If I go over, I pay a premium of €0.25 for each minute/text I go over. Simple.

It can be done!

Simple pricing schemes are also a major differentiator for many MVNOs in Germany. At least the two biggest carriers with their own network in Germany are just as confusing as their US counterparts but the MVNOs (some of which are subsidiaries of the big carriers) advertise their simple pricing heavily. (This is my favorite plan at the moment: 15 euro for 1GB of HSPA data, GPRS data unlimited; 9 cent for every minute [nothing for incoming minutes as is usual in Europe] and SMS; two SIMs. Perfect for someone like me who doesn’t need many minutes or write many SMS but would like to use data quite heavily.)

My old economics professor likes to use Scott Adams' term: a confusopoly. (http://blogs.hbr.org/cs/2011/03/is_paul_krugman_click-worth....)

The pricing is supposed to be complicated, so you don't pay much attention to it.

Dilbert Link: http://search.dilbert.com/search?w=confusopoly&x=0&y...

Another agreement. My pet peeve. Real-estate agents should put a price on houses they are trying to sell. I'll either buy, or I won't. Who wants to pay for building reports and lawyers before an auction just to turn up and realize they can't afford the property? Agents underestimate sale price to get people to come to auctions. And what's with silent auctions, and all their other BS. Ask for what you want by putting a price on whatever your selling.

As someone who works on the pricing system for a distribution company - this article may apply to retail, but it definitely does not apply to everything. Our suppliers try to screw us at every turn by making us deal with complex cost side, so we have to have an incredibly dynamic and flexible system to deal with an international customer base.

Although the point about simple pricing might have been an overwrought Apple-specific intro, the real point is: dayum, what was NYT thinking with this weird, expensive pricing structure? And not even a discount for getting both subplans together?

Wait... You're complaining that Gruber is putting an Apple angle on one of his articles? Do you also complain that water is wet darnit?

So, first he talks about how simplicity of pricing is key. Then he describes how an Apple Ipad, with about a dozen different prices depending on what you want, is simply priced. Then he describes how the New York Times, which has only one price that most people will ever care about ($15 for unlimited web access), is unsimply priced.

True brilliance.

Well, the iPad's pricing is relatively simple to figure out: $499, plus $100 for every storage increase after that. If you want 3G, that's $130 extra.

The New York Times, on the other hand, seems less logical. The website+smartphone app is $15/4 weeks, the website+tablet app is $20, all three is $35, so the website is worth... nothing? Or, you could go with the home delivery option, which would cost you $455 (all digital access) -$304.20 (daily delivery in NY) = $150.80 less per year, even though they have to print all that paper.

More importantly the iPad's pricing is normal. The Nook, the Kindle, and the Xoom all come in different versions. People expect to pay different amounts for different hardware.

Nobody's doing what the NYT is doing. Netflix and Hulu are given as examples of content producers that have a simple pricing scheme over multiple devices. Lots of people use those services. The NYT pricing not only violates expectations for online content, it doesn't even seem typical for newspapers. Paying per 4 weeks instead of per month? Who has ever done that?

Yes, exactly. Perhaps the 4 weeks approach is to link it with the existing home delivery system (which is also calculated by week), but it sounds strange in practice.

I guess we'll see how it turns out, though. Maybe most customers won't actually mind these irregularities.

Actually, my guess is the every-four-weeks bit is to goose revenue.

With monthly, you're getting paid 12 times a year. With every four weeks, you get paid 13 times.

It's a nifty little sales trick. Most people (including me) automatically round four weeks up to a month before thinking about it.

There are 6 prices for iPads. 16/32/64 Wifi. 16/32/64 3g.

I would say people would care about the other NY Times plans. I would personally much rather use a NY times App on my iPad (Which would mean the $20.00 plan) versus using it on my iPhone. But if I wanted to use both apps, it would cost $35.00. It's cheaper just to get the physical paper delivered to your house.

But for 3g you also have to price in Verizon vs ATT as they have different pricing structures.

Your confusing # of prices with the simplicity of the pricing scheme. With Apple, I can justify to myself why I'm paying more for a product (eg. size increase, 3G). With the NYTimes, its hard to justify why I should pay more for (1) a digital copy and (2) the same content on different platforms.

And what's with the gratuitous snark about a car being something people "think they need"? Presumably these are the unenlightened few who don't realize that if they aren't banging out apps from their homes they can damn well walk the three blocks to the WiFi cafe.

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