Having a small pricing differential between your mid-tier and top-tier offerings and offering other valuable benefits with the top tier can be a useful strategy to entice customers to choose the top-tier option.

Digest...

Flickr’s competitors – many of which have offered unlimited storage (with minor restrictions) for years – might be wondering why Flickr got attention for offering an amount of storage that is technically less than what they provide.

 

Flickr likely adopted this strategy by offering a “very high” level of benefit, which people perceive as more valuable than an “unlimited” benefit.

 

Let’s look at how you can apply this psychology to business-to-business offerings. Think about product or service benefits you offer at an unlimited level, such as unlimited lifetime replacements, unlimited 24-hour customer service or unlimited user accounts. Consider instead offering a very high limit, such as up to 500 replacements over the unit’s lifetime or up to 5,000 user accounts. Granted, some customers will likely do the math and realize that they will never take advantage of the full benefits. To avoid backlash, you can apply benefit levels with a tiered pricing strategy.

 

Having a small pricing differential between your mid-tier and top-tier offerings and offering other valuable benefits with the top tier can be a useful strategy to entice customers to choose the top-tier option.