Rogers iPhone, Subway Sandwiches & Why Setting Fair Prices is Important

If you live in Canada, you’re probably already aware of the massive backlash Rogers Communications is feeling from the announcement of their Apple iPhone plans. The phone is set to launch in Canada that Friday, and already ~ 50,000 have signed a petition boycotting the product launch.

For a company that prides themselves on customer satisfaction and hassle free operation (Apple), things in Canada are quickly snowballing into a PR catastrophe as a aftereffect of Rogers pricing options. Obviously Apple was aware of the prices before Rogers released them. They probably came out of a slick PowerPoint presentation detailing the geographic difficulties facing Canadian cell phone providers and whatever other jargon Rogers partner management division could find to justify the pricing. Rogers has a monopoly on GSM service in Canada, so there are no other options for consumers.

It’s clear that the pricing was disastrously incorrect. Why? and what to do now? Large or small, setting fair market prices relative to your global peers is vital. Whether you’re working at home selling an Net marketing package or providing cellular service to millions of consumers, finding the exact price point can either form, or break you.

I additionally mentioned Subway sandwich prices considering yesterday Joe came back for lunch bearing a $20, footlong sub sandwich. He hadn’t looked at the menu assuming all subs were around the $5-8 mark, and clearly that wasn’t the case. $20 is not a typo - that is unmistaken. $20 for a sandwich, from Subway. I should note that it was the lobster and seafood sub, but twenty dollars for one standard fast food sandwich is insane.

#1. Don’t Be Evil

I’m referencing Google’s mantra here considering I find it so relevant. whether you had a monopoly on a service in an entire country, would you try and pull a fast one and gouge customers? whether you answered yes, it’s likely you’d be a great fit within Roger’s mobile division :). Would you ever sell a fast food sandwich for $20 bucks knowing that the average price is less than half that?

You Can Pay to Use WhyDoWork.com

it’s likely you didn’t know that, but we do offer a paid subscription service to our site with some great benefits like no advertisements on the entire site, one-on-one coaching and job search advice, and featured profile placement on our main page. How much for all that? It’s currently priced at $20/year or $1.67 a month.

I like free, and the other administrators additionally like free so it’s not something we promote to death. I’m undoubtful whether we made some empty promises and set up a multi-level commission structure and handed out one page sites for affiliates to promote we’d recruit hordes of noobies ready to lay down whatever price we set but it all goes back to point #1.

How Did We Set a Price?

Our price is set under the assumption that regular, repeat visitors will not visit ads 90% of date that they visit the site. Assuming we bring in $14.00 for every thousand pageviews, a user generating 900 pageviews a month would represent about $12.00 in revenue. Since we’re assuming that user wouldn’t want to visit anything 90% of the moment they spent on the site, we’re left with about $1.20. Put a small markup of about 45 cents and voila, we’re at $1.66/month.

Looking at other social sites that offer paid membership upgrades or packages, we’re confident that for a small niche of users that is the best value available on the Web. whether you’d like some insight into how to price your own products, here are the two scenarios facing all businesses, large or small:

Option 1: Lower Prices Compared to the Competition:

• Aim for a high volume of sales with low profit margins
• Main goal is to expand the market, steal market share from other competitors, to
remain competitive in the market, or to keep competition from entering
the market.
• Using the companies I’ve referenced above, consider lower cost entrants like Koodo mobile or Virgin Mobile in Canada. Both try and undercut the competition and steal market share.

Option 2: Higher Prices Compared to the Competition:

• Aim to maintain a quality position in the market with high profit margins to
support production costs and promotional activities.
• Purpose is to offset development costs for a product with a short life span,
substantiate a quality image, take advantage of a high-demand and low-
supply situation, or to charge more considering the product or service is hard for
competitors to copy.
• In the case of both the million dollar sub and Rogers iPhone, it remains true that both are in low supply from the competition. Both TELUS and Bell can’t offer the handset so there’s no threat there, and I haven’t seen a lobster sub on Quiznos menu at any moment.

Option 2 Can Work, BUT…

It will only work whether your product is totally different, and your business perceived to be of the highest quality. Rogers already has somewhat of a crappy customer service reputation so no consumers are really that interested in paying them premium prices.

Try and apply the above options to your business and see where you fit. Are you pricing your products correctly? whether you’re pricing high, are your services top quality and rare? Regardless of the business your in, taking a close look at these tips will be extremely valuable in your quest for success.

Time to go try that super expensive sub! (maybe just the six inch)

Orginal post by WhyDoWork