Price Points

We will have decide on our membership fees at the annual general meeting on 23 September 2010, and so I thought I might share with you some generally accepted ideas on price-points.


I have studied marketing for years when working towards Fellowship of the Australian Insurance Institute and in Executive Development Programs, and have a degree in Economics and diploma in Business Studies. That doesn't mean I have the only right answer any more than anyone else, but it does mean I have come to many conclusions that I think are soundly based and that I hold firmly.

I think I can reasonably expect fellow members to consider those views, not in a one-minute discussion at the AGM, but carefully and with time to think things through.

Price is not a major problem for us, and our activities represent excellent value-for-money. However we would all have noticed that the folk community is at the price-sensitive end of the spectrum, a long way from Yves Saint Laurent buyers who will buy more if the price is higher.

For us, there is always "elasticity of demand"; higher price = lower demand. People fall along a spectrum, and some will be on the margin between paying and not paying. More of them will drop out at price points like $30, which is why you hardly ever see anything priced at $30 at Woden shops (they would go to $29.99 but that's a bit too contrived a price for us to use).

There will be unengaged folk who don't think about it, they just see the price that they perceive as in the next $10 price bracket and we're gone. Buying decisions are initially based on a quick emotional reaction to our price and whether we are speaking to the customer's needs.

People then rationalise their decisions but we and our product have to achieve that initial interest before they will go on to think about our offer.

So, the bottom line is that I think our prices should be figures like $29, not $30. I am more concerned about the extra members that we are likely to get at $29 than at $30, than I am about giving change, and when you go from prices like $29 to $30 you are likely to lose more from lost "sales" than you gain from those who remain.

I have these firmly held convictions that I would like you to consider, but in the end I will of course go with the majority opinion.

Regards
Lance