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Simple pricing technique to increase physical music sales


Could a simple change in pricing strategy increase album sales?

I read an interesting experiment in ‘Predictably Irrational’, a new book by Dan Ariely. It runs like this:

A real advert in The Economist magazine promoting annual subscriptions offered three pricing levels, and in an experiment 100 students were asked which one they would choose (answers in brackets).

  1. Internet only $59 (16)
  2. Print only $125 (0)
  3. Internet and print $125 (84)

Obviously no-one chose option 2 since the addition of the Internet version in option 3 was perceived as ‘Free’. However, crucially, option 2 provided an important psychological ‘decoy’, as evidenced when the experiment was repeated without it.

  1. Internet only $59 {68}
  2. Internet and print $125 (32)

Now, people chose the cheapest option while the print version was simply considered as more expensive without a significant enough perceived benefit.

It strikes me album pricing could benefit from following a similar path. How often have you seen this offer for an album?

  1. Download album $7.99
  2. Physical album $14.99

Why not price albums as follows?

  1. Download album $7.99
  2. Physical album $14.99
  3. Download and physical album $14.99

Since the additional cost of allowing people to download the album is minimal (the cost of the bandwidth) then by using the physical album as a decoy, retailers may push more people towards buying the physical album since they perceive the download as ‘Free’. despite the fact they can naturally rip the album as soon as they receive it.

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About Neil

Neil Cartwright founded Million Media in 2006 with the aim to help people understand digital marketing and use it to their advantage. The vision hasn't changed but the technology has.

6 comments on “Simple pricing technique to increase physical music sales

  1. Mark
    August 2, 2008

    Ha. Music blogs all offer up the same advice. Really, like once you’ve read one, you’ve kind of read them all. However, this tiny post of yours was actually something genuinely smart, obvious, and something I have never seen presented in such persuasive terms. Will definitely think about how I might integrate something along those lines in the future.

    Thanks,
    Mark

  2. Ari Koinuma
    August 3, 2008

    Well, Nine Inch Nails are already doing the tiered approach to their music distribution. I think that’s the way to go in the future. Something like this:

    1. standard-quality mp3 (free)
    2. high-grade mp3 or lossless version (.99 per song)
    3. CD+ #2: ($15)
    4. Premium package (CD, bonus material, extensive booklet, making of DVD, etc. — $50-$99??)

    ari

  3. matt stevens
    August 3, 2008

    Wow interesting idea – depends how great the packaging is!!!!!

  4. Music, Websites & Marketing
    August 24, 2008

    Thanks for sharing this simple tip.

    It makes so much sense to offer digital bonuses to increase the perceived value of the total package since they cost next to nothing to actually deliver.

    I’m sure you could even add exclusive bonus track extras, wallpapers, interviews, etc to option 3 to give it even more oomph over the first 2 options.

  5. Pingback: A Simple Technique To Boost CD Sales : Chris Yong - Moving Forward with Music, Websites and Marketing

  6. Pingback: N3w M3d14 » Blog Archive » Clever pricing strategy

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This entry was posted on August 2, 2008 by in marketing, music, retail and tagged , , , , , .
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