Having choices is a good thing. When I get my car washed I have a choice of three different levels. Silver, Gold, or Platinum and each level provides a bit more than its lower-priced sibling. I see the value of Platinum when compared to Silver and typically settle for Gold. I determine the value of my purchase and decide which suits my needs.
The idea of choice is something I’ve been considering for my studio. Offering three price points for professional services, each building on the services of the previous, just like the car wash. Would this give clients the perception of better control of their purchase or just confuse the process?
Currently, my rate per project includes a full range of services for one base price. This example is for non-broadcast and the size of the script and intended audience would impact the final rate.
Breaking things down into price point levels would look something like this:
The rate for the Green Package would be what I’d typically charge for a job. For example let’s say my current rate is $200 for up to 2-minutes of explainer video narration. With the tiered levels Green would be $200, White would be only 10% less than Green or $180. Purple would be 25% more than Green or $250.
I’m guessing I’d want the step-up between White and Green insignificant enough that clients would feel it was a good value for the small increase in price. The value proposition should still be in place between Green and Purple but maybe one that the client has to really consider before selecting it.
Another option is to create perceived value by pricing the Green and Purple identically. Numbers could be $200 for White, $250 for Green, $250 for Purple. According to a study by Dan Ariely, a professor of psychology and behavioral economics, when a group of MIT students were presented with price points like those outlined above, Green was totally ignored and Purple was identified as the best deal.
However, when Green was removed, the students selected White because there was too much contrast between White and Purple. The students became bargain hunters and convinced themselves they didn’t need the upgrade. Hmmm…
Is there another rate method that might work better? I’d like to know your thoughts and ideas. Please share your suggestions in the comments box below.
© 2015 J. Christopher Dunn