The Placebo Effect … on Pricing
OK, so here's an interesting dilemma for many businesses out there, including us here at IPOWER.
I just read this fascinating article from The Washington Post on "The Price-Placebo Effect." Most people understand the Placebo Effect as it pertains to medication studies: "control" participants are blindly administered a sugar pill instead of actual medication, and yet still experience improved symptoms, probably as a result of their belief that they have received real medication.
The Price-Placebo Effect takes the same tack, but instead of medication being the agent of change, price is strangely the culprit. The Price-Placebo Effect, according to the article, is basically the notion that people experience more pleasure (i.e. larger activation in their medial orbitofrontal cortex) when they consume a product that they pay a higher price for, compared to those who pay a less-expensive price.
While the article leads off referencing the uncomfortable Eliot Spitzer scandal, the more relevant story revolves around a study in which two groups of participants were asked to drink some wine: one group from a bottle priced at $90, and the other group from a bottle priced at $10. The participants who drank the $90 bottle not only indicated an overall higher level of enjoyment (as to be expected), but they also had experienced more activity medial orbitofrontal cortex than those who drank the $10 bottle. The catch? They drank the exact same wine.
So what does this tell us about pricing our products? Well, for one thing, Apple's got it right. The price of their notebooks is significantly higher than it needs to be, and yet they don't have much trouble (a) selling them like hotcakes or (b) cultivating a dedicated (some might say fanatic?) userbase. In fact, it wasn't until the end of last year that they even contemplated releasing a notebook under $1000. So what's the story here? Great products justifying expensive prices? People paying for the "brand"? Or is there something actually physiological going on?
It's tough to say, but notions like these definitely make us think about our strategies. The webhosting industry is a complicated one--commodization is driving prices down and requiring hosts to underprice their services. Two years ago it was ludicrous to advertise a price under $6/month. Now that price is considered expensive. And yet does our catering to the competitive nature of the hosting market mean our product is any less valuable to consumers than it was two years ago? In fact, no--our product is constantly improving and evolving and a hosting plan now is "worth" more than ever. It would be great to price our plans to invoke the "Price-Placebo Effect," but unfortunately, the likely result would be potential customers hammering the "Back" button as soon as the images start to load on IPOWER.com.
So how do we tap into this pricing enigma? Have you tapped into it?
Have a Wonderful Fourth of July
We at IPOWERWEB would like to wish you and all your loved ones a happy and safe Fourth of July. As always we are available 24x7x365 by phone at 888-511-HOST(4678) OR via email at Support@IPOWERWEB.com.
Memorial Day 2008
Memorial Day is an American holiday in honor of every U.S. soldier that passed away during their military service for their country. Memorial Day is always celebrated on the last monday of May.
Due to the nature of Memorial Day, not every search engine has decided to create a special logo for Memorial Day.
The following is a note from Google on why the company decided not to have a special logo in honor of Memorial Day.
"We understand your interest in seeing a Memorial Day Google logo. If we were to commemorate this holiday, we'd want to express reverence; however, as Google's special logos tend to be lighthearted in nature, this would be a particularly challenging design.
We wouldn't want to create a graphic that could be interpreted as disrespectful in any way.
We have a long list of holidays that we'd like to celebrate in the future. We have to balance this rotating calendar with the need to maintain the consistency of the Google homepage...
Regards,
The Google Team"
Below is an image of Yahoo's logo in honor of Memorial Day.
Birthday of Walter Gropius
Walter Gropius is regarded as the father of modern architecture. He was born on May 18, 1883 and in honor of his birthday Google has redone their logo.
The Anniversary of the First Laser
When visiting Google today you will notice that its homepage logo looks a bit different.
Today marks the anniversary of the first laser. Theodore Maiman demonstrated the first working laser on May 16, 1960.
Have a Wonderful Mother’s Day
Today is the second Sunday of May, which means it's Mother's Day. We at IPOWERWEB would like to wish you and your loved ones a wonderful Mother's Day.
In Need of a Mother’s Day Gift?
Are you looking for the perfect Mother's Day gift but just can't find it?
Allow IPOWERWEB to help, our Pro Site web hosting Plan has never been priced so low. For a limited time you can purchase our award winning web hosting plan at only $4.95 per month.
An IPOWERWEB web hosting plan is the perfect gift for any mother - to learn more about our web hosting give us a call at 888-555-HOST.
Stamp Prices Rising
In February we told you that the prices of U.S. postage stamps will be rising on May 12th. We would like to provide you with more information on the new prices.
As of May 12, 2008 the prices will be:
First-Class Mail letter (1 oz.) $0.42
First-Class Mail letter (2 oz.) $0.59
Postcard $0.27
First-Class Mail large envelope (2 oz.) $1.00
Certified Mail $2.70
First-Class Mail International to Canada and Mexico (1 oz.) $0.72
First-Class Mail International to all other countries (1 oz.) $0.94
Cinco de Mayo
Today is Cinco de Mayo, marking the Mexican victory over French forces at the Battle of Puebla on this day in 1862. "Cinco de Mayo" is Spanish for May 5th. Below is a picture of Yahoo's logo in honor of Cinco de Mayo.
Nintendo Wii Not Dropping in Price
It's common to see the price of gaming systems drop after they have been on the market for a few years (or in some cases months). The price of the XBOX and the PS3 have lowered in recent months, while the price of the Nintendo Wii has remained the same. Nintendo is now saying that they have no plans to decrease the price of their popular gaming system. This means that if you are looking to purchase a Wii as part of your weight loss program and don't want to pay full price, you may have to wait a bit longer.