For example, I currently have 2 different membership plans that customers can select from (e.g. Silver, Platinum). In addition to the product pricing being cheaper for "Platinum" members due to these members paying a monthly fee there are also other services I offer at this level that the "Silver" members don't receive. So my question is, should I just "simplify" the product pricing and make it the same for both membership plans and entice users to join my "Platinum" plan based on the other services I would offer at this level?

Your problem is typical of a start-up that treat product pricing as a quantitative problem, or an afterthought. As a matter of fact, product price is directly related to marketing and consumer psychology. Your intent to use same pricing for different membership plan speaks volume about the conundrum in your mind.

If you're a technology company then you need to look at it beyond the economic theory of supply-demand. Because, over time your cost of production approaches zero. Ideal way to get started is to benchmark it against your competitors. And, while you do that, ensure that you benchmark your product in first hand than pricing.

But, what if you don't have a competitor to benchmark against? In that case data would be of no help. You would need to get started with setting an hypothesis. The rule of thumb is to create a gap between price and perceived value large enough to pull customers.

Secondly, price is often traded as proxy for quality. In your case, it could be quality of customized service or additional features.

Thirdly, keeping price similar, you may lose on creating an entice point for your market. You lose that and you lose an opportunity to understand the embracing price point. Something, larger segment of market will embrace you at.

I hope this proves to be of some help!! Thank You.

Answered 7 years ago

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