Thursday, June 17, 2010

Prices starting at $595

Two unequivocal certainties in this life: 1.} Your mortality 2.) $595 is NOT what you will pay.

I thought Mark Twain was very clever in his observations about many things including The Eternal Dirt Nap and taxes but he was dead-wrong about the latter. Lots of weasels NEVER pay taxes. And they don't pay $595, either.

Back to the "Prices starting at" practice of marketers. Marketers are fortunate in that your average consumer has the business IQ of laundry lint. The average consumer may very well be physically drawn into that retail location because, after all, they can purchase that exquisite sofa made from mohair and extinct Woolly Mammoth fur for $595 if they hurry, hurry, HURRY! (it is a limited time offer, of course).

Supply and Demand-with a little time and room to breathe- will get you to $595 or less. The consumer still holds the cards in this setting but the dynamics of commerce differs a bit when it's one business selling to another.

For example:

I worked for a gigantic software company that sold its wares only to other business. They are a publicly traded company so there is tremendous financial performance pressure four times a year. Unlike almost all their competitors, they publish the List Price of all their products on their website. That List Price, when printed to paper, made for excellent bird cage lining or for training your new puppy.


Because the OVERWHELMING majority of their customers and even first-time customers knew that List Price was about as real to them as The Easter Bunny. They knew that when the end of the fiscal quarter came down to the last two days, they could pay pretty much whatever the hell they wanted to pay. (I wanted to add "within reason" but the whole process was so ridiculous- I won't).

The only thing more comical than the validity of that vendor's List Price was management's and even Senior Management's attempts to get customers to pay closer to Full Price earlier in the quarter.

If a dog knows they can get hamburger EVERY TIME by behaving in a certain manner, what is their incentive to eschew eating hamburger when they know it is available?

Step right up, my friends!!Four processors worth of our FINEST software....prices STARTING at $160,000!!! Oh really???. Four "Procs" for 160K, eh?? I'll give ya half that much and I want the Maintenance Agreement extended a year at no charge.

You're too kind...where do I sign?

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