In Foundation 2: How Buyers Decide – Will I? or Which one? we emphasized that buyers are not price sensitive when making the ‘Will I’ decision. Here’s the magic. There are products out there where buyers only make the Will I’ decision and never go on to make the ‘Which One’ decision. Let’s call these ‘Will I’ products. This means, for ‘Will I’ products, buyers are not price sensitive!
Wow! If you have ‘Will I’ products, you could raise your price by 10% and it probably wouldn’t impact the number of units you sell. That’s 10% more revenue, all of which is profit. Woohoo!
The five categories of “Will I” products
Now you should be thinking, “How can I create ‘Will I’ products?” Great question. Here are five categories of will I products: monopolies, radical innovations, huge differentiation, switching costs, options. Let’s go through each one with examples.
Many places only have one electricity provider. If you live in one of these places, the only choice you have is will I buy electricity or not. You can’t choose the electric company. That is a monopoly. If they raise their prices, do you stop using electricity? If they raised prices a lot you might begin to cut back on how much you use, but for small increases, you might cut back for a little while, but you’d soon be back to your old behaviors.
If you are first to market with something extremely radical and new, buyers only make a ‘Will I’ decision. Imagine the first iPod. Before the iPod, there were mp3 players, but when Apple released the iPod it was so innovative, so easy to get music on. Most of us only made the decision to buy an iPod without even considering the Diamond Rio (a clunky mp3 player).
When your product is different enough from the competitors, buyers may only consider whether or not to buy from you. Think of LinkedIn for recruiters. There are a lot of software and database companies that help recruiters, but LinkedIn is so unique because of their network. Many buyers don’t compare LinkedIn to Indeed. Instead, they just buy LinkedIn.
If you have a customer base that has a high switching cost and want to upgrade them, the buyer really doesn’t have a choice. They buy from you or don’t upgrade. Think of the iPhone. If you are currently an iPhone user and don’t have the latest and greatest one, you are probably thinking, “Should I upgrade to the new iPhone or not?” You are probably not thinking, “Should I upgrade to the new iPhone or switch to Android?” Hence, iPhones are very expensive. They are a ‘Will I’ product.
Options or add-ons
This is the most common place to find or create ‘Will I’ products. If someone has your base product and wants to buy more capability, they often can only buy that from you. Those options are ‘Will I’ products. Imagine you bought a Tesla but didn’t buy the Ludicrous mode option. If you decide you want that option later, the only place to buy it is from Tesla. It’s a ‘Will I’ product when bought after the fact.
‘Will I’ products are those products where buyers typically do not consider a competitor’s product. They just choose to buy the product or not spend the money.
Providers of ‘Will I’ products have pricing power. They can raise prices a little and not have it impact unit sales. Buyers are not price sensitive.
Look through the list of ‘Will I’ product categories. Where can you build some ‘Will I’ products? That’s where the big margins are.
Tags: pricing foundations