A colleague sent me this text and picture:
Check this out! GBB (Good Better Best) strategy but they took the “best” version and physically placed it in the middle. I sent it to the team. Pretty clever given people tend to buy in the middle… What are your thoughts?!
My thoughts: Whenever we see a company do something out of the ordinary, it’s worth thinking about. What are they trying to do? How do we think shoppers will respond? Of course, I don’t know the answer and would love it if someone from rvtrader.com shared the results with us.
Obviously, the company is trying to get more people to buy their best package. By placing “best” in the middle, highlighting it in yellow, and putting “popular” at the top, they want people to consider this option seriously. I bet a higher proportion of buyers buy the highlighted version than before they used this tactic. So far, so good.
However, it also probably caused some people not to purchase anything. One of the beauties of GBB is that “better” is the safe package. People don’t want to make a mistake. They are afraid if they buy “good”, it may not be good enough. If they buy “best”, they may be wasting money. By highlighting “best”, some buyers get confused, and … confused buyers don’t buy.
If we assume what I said was true, then rvtrader will get more revenue from a higher proportion buying “best” and less revenue from fewer buyers overall. This is a successful pricing strategy if their overall revenue (really profit) is higher.
Here are two alternate strategies they could have considered.
- Remove the Enhanced version and add a much bigger package at $500. Then the current $249 package would be the safe choice in the middle.
- Use a decoy strategy by pricing the Enhanced version at say, $229. People can easily compare it to the best package and quickly realize the incremental value is easily worth the incremental $20
What do you think is going on? What would you recommend?
Now, go make an impact.
Tags: pricing, value, value-based pricing