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Price Tiers
I'm trying to develop a new product, which is offered in several tiers. Each tier will have different usage limits. I'm trying to ensure that the limits by tier are meaningful and provide a clear upgrade path. One of the unintended effects of this tiering could be people using the product improperly in order to avoid paying additional fees or moving to another tier.
You're exactly right: your pricing should be obvious to your sales people and your customers. I invite you to read Joel Spolsky's article on pricing.
One of the nice things about standard monetary units like the Euro is that people don't play current exchange games. Likewise, some firms like Apple and BOSE set a standard price and do not allow discounting. I think you may be cutting things too fine. What you want to avoid in pricing is order-of-magnitude deltas. I can buy x for $100 or y for $10,000. I should be ok if someone buys x for $90-110 but would be livid if they bought y for that. Similarly, think of the copy protection for MP3s. The record labels should want to prevent 10,000 thefts but they have gone after the people who have made 2 or 3 copies. So 2 or 3 copies could be easily explained, copies more than a dozen are potential thefts, and 10,000 is clearly a file on a public network. They should try to stop the last one.
Answered by Steve Johnson
