I have been thinking about how to order your pricing in a subscription model. These last couple of months i have been reading; ” Influence: The psychology of persuasion.” One of the models that the author addresses is reciprocity. He states that the compliance rate of the rejection- then- retreat technique is very significant. As an example; if we ask on a campus if a student would be willing to go to the zoo with youth juveniles every week for a year 83% would say no. But if we back off after this question and ask them to at least go once, 50% would say yes. While if we would just ask them to go once, the compliance rate is only 25%. So, by asking a more and then backing off you get your compliance rate to increase with 100%. This principle is caused by a combination of the reciprocity tendency and the contrast mis-reaction tendency. Now to the marketing part; i am wondering, why are all subscription models priced like this; free – $100 – $ 1000 ( from cheap to expensive). Wouldn’t it make more sense to go from expensive to cheap ( $ 1000 – $100 – free). By doing so people will make a concession and take the second option.
Jay’s Answer: The reciprocity model in the book is about a conversation. Start with a large demand, but with the goal of actually achieving a lessen demand. That works well when there’s one offer in front of a person at a time and you understand what the person needs.
When someone visits a website or reads your marketing materials, there’s likely no one from your company there to influence. The person reading may not be a serious lead, but is simply curious. So, would you rather have a random person interact with your company regularly (for free) or walk away? One common goal is to use the sales funnel to move them from free to very-low cost, and up the chain. You give them a taste and hope they buy a box to take home. If you start with a large price at first, the random person would read no further.
If you have a pre-qualified lead, then it would make sense to offer the $1000 option first.