How to get higher prices – even if the lower price “wins” in a price test!

We just got two sets of price test results for a management newsletter in Canada. They tested a Canadian price of $119 vs. $159. They got 123 orders ($14,768) at the lower price and 85 orders ($13,549) at the higher price.

They also did an international test for the newsletter of $139 vs. $199. They got 79 orders ($10,939) at the lower price and 57 orders $11,310) at a higher price.

At first glance, these are not exciting results. Because the money is roughly equal in each test, but the number of subs is substantially higher at the lower price, this company will be best served by going with the lower price. After all, most newsletters make 10-20% of their revenues from ancillary sales to subscribers. So all those extra subscribers are worth good money in add-on sales.

However…it seems to me there’s something else to be gained by these results. They appear to have a rather large group of people — more than 50% — for whom a higher price is absolutely no problem. So, why not come up with a way to capture a higher price from this group?

For example, they seem ripe to me for developing a “premium” subscription product, that includes the newsletter but adds on some extras. The company should research the respondents who were willing to pay the higher prices, seeking characteristics that differ from the subscribers preferring the lower prices. Those differences could drive the type of add-ons to develop for a premium product offering.

Thus, price test results that favor the lower price can sometimes indicate a healthy group willing to pay much more. In that case, give them something to encourage them to do so — even when the “basic” product is available at a lower price.