Magnetic pricing strategy article

The first rule of pricing is: you do not talk about pricing

Magnetic Management Consultant Tom Whitwell was part of the team that introduced The Times paywall.

Here are his learnings on pricing strategy.


Empty hand
The Times digital price pre-2010
The Times digital price post-2010

Introducing what inevitably became know as “The Times Paywall” or “Rupert’s Pathetic Paywall” inspired a powerful reaction, with plenty of headlines like this one:

Screenshot from Techdirt
Explain it again, Mike, I’m not sure how you feel. [Techdirt]
This happened a *long* time after I left The Times [Campaign]
Picture: Along the Trail
The wine list at Philou in Paris (via Not Drinking Poison)

When they’re not discussing philosophy or plotting affairs, the customers engage with these arbitrarily sorted spreadsheets to buy wine.

You can’t buy the first wine on the list, because you’ll feel like an ignorant cheapskate.

So you look at the second wine. But, as a sophisticated Medium-reader, you’re well aware that the second wine on the list is the most popular, so the restaurateur will ensure it is also the most profitable.

You don’t want to be suckered into buying the most profitable wine on the list, so you trick the restaurant by actually buying a more expensive wine.

It’s a minefield.

Prices are a shortcut to our most sensitive emotional responses.

The smirking face of price sensitivity is, of course, Martin Shkreli.

Netflix doesn’t have simple pricing anymore. It has a range of prices, from £5.99 for one person to £8.99 for four people simultaneously streaming HD video.

I don’t think anyone at Netflix expects people to actually pay £8.99 for a house full of people glued to their screens. But the £8.99 price makes the £7.49 price seem more credible. With 70m subscribers, it’s worth trying.

The first rule of pricing strategy is that you don’t talk about pricing.

The second rule of pricing strategy is that you don’t think about pricing.

When The Times introduced a paywall, the number of people looking at their digital service dropped by 98.7% (from 22m to around 300,000), yet the switch was a huge success.

The third rule of pricing strategy is that experiments are the only way to make sense of it all.

People can’t tell you what they think about pricing, because they don’t think about pricing. They feel it.

The actual email was a split test on price, and was slightly less crappy looking.

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