Grow The Business with “Replicating pricing model”
There are so many playbooks available in the game of innovative pricing. One of those is what I have called “Replicating pricing model” - a pricing model where the product has a low initial cost-burden for users, making it easier for customers to adopt the product, but with the requirement that over the life of the product, the product will be generating additional income. The implication is that you can easily scale the product through faster penetration due to the low initial cost required to acquire it.
Subscription service pricing is not a replicating pricing model because most times the acquisition cost remains the same cost you pay over time. Good product examples of replicating pricing model are the following:
-Razor and blade: You pay for the razor and over years you keep buying blades.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
-Printer and Ink Cartridges: You make the cost of the printer very low and then make money via ink cartridges. Dell at a time was giving away free printers knowing that the money will be made via inks.
Without the ingenuity of the pioneer of software sales, the industry would not have made so much money. In software, you buy a product, but you never really own it unless you keep paying licensing fees. Imagine if Microsoft and Oracle do not have annual licensing fees from their corporate clients, their success would not have been significant. Of course, car companies like Tesla (and Mercedes Benz) are coming along where you continue to send them money for certain things to work in that car.
Get it from me, that business can do better if you engineer a smart pricing playbook. More here
Paying for premium shelves
Of course, if you have the funds as Google does, you can also explore paying for premium shelves.
The opening salvos of the "once-in-a-generation" antitrust courtroom battle between Google, the U.S. government and dozens of states have focused on the tech giant's $10 billion annual payments to Apple, Mozilla and others to make it the default mobile search engine. On Wednesday, the Justice Department began questioning former Google executive Chris Barton, who led mobile partnerships and was with the company from 2004 to 2011. He acknowledged Google built a product team once it "recognized the opportunity" for mobile search. Google maintains that it is dominant, because it's better than competitors; the government argues Google rigged the market. The first day of testimony examined internal Google discussions about trying to become the default search, which included mentions of antitrust concerns.
Google owns about 90% of market share — thanks to deals with Apple and others, making it the default search engine on most U.S. phones, the government revealed in court.