52 Bicycles

I believe in simplified pricing. Give people a model where they know how much they are paying up front, and gives incentive to use as much as they need. Micropayments, tollbooth pricing - they all create uncertainty in both the cost and revenue stream.

Hitchhiker’s Guide to 650 has an interesting solution at least as regards micropayments collection: let it build up, and only cut a check when the amount is big enough.

While this may make each check more satisfying psychologically, the only economic impact is to help the bank make money on the float while the check accumulates.

Even when we sell “as a service” I believe in block pricing or subscription pricing. This is a long-recognized (PDF) phenomenon in telecom, so let’s not lose sight of it now.

As a customer, I would pay a little premium over a per-unit x median usage to get a fixed level of cost (indeed, I do with my cell phone plan).

As a vendor, I would be willing to cut a discount in return for cash up front and a more predictable flow of revenue.

That creates a gap in which we can find a happy medium that creates additional value for the customer and the vendor.

This entry was posted on Tuesday, November 22nd, 2005 at 2:26 pm and is filed under Technology Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. Reddit This