Pricing Strategy Tied to EOLs
EOLs (end of lifes) on product lines, especially multi-product portfolios, are a fact of life. So, how do you deal with pleasing customers of a product line when only 1 product from that line is being dropped.
You do exactly what Apple did yesterday with the iPhone.
This was great because, while they did make a couple of people angry, the leveraged a short-term refund policy for those that really did just buy iPhones yesterday, but they managed to smoke one product off the iPhone line.
But the big news isn’t about the EOL — it’s about the price drop. Could they have killed this one product off better? I don’t really think so.
So, clearly there were enough people willing to spend some bucks on the smaller iPhone, but the price reduction should be enough to not only allow those folks to buy the iPhone, but also spend a little bit more than they were going to originally.
I wonder if this applies to Web applications? It would probably be a little tricker to execute, but you could do it. If you had two streams of a subscription product and wanted to EOL one of them, you could totally drop the price of the bigger / badder stream to catch the customers that were either about to purchase the smaller one, or in the process of thinking about the smaller one.
But, the tricky part is, because the subscription isn’t tangible, do you get the same effect? Well, the upgrade would work the same. You keep the limited functionality of the lesser-price subscription stream around indefinitely, and offer users that just bought the cheaper one 30 days ago (for example) a free upgrade for 6 months or something.
Very cool stuff. Well-executed product marketing strategies right before our eyes.
Now, if I lost my mind and bought a “Vista-ready” PC, would I go for Vista flavor 1 or 8? Hmmmm….see, there are never-ending arguments to Apple vs. Microsoft. But the one that’s ultimate for me is one of slickness / sexiness and this iPhone EOL is case in point.
The product and strategy are so damn slick, that no one even really cares they are dropping a product and refunding a small group of customer base. At the end of the day, the customers are still investing in a very cool looking product, which is satisfying. OS X may not have the 1,00,000,000 features Visa versions 1-8 do, but damn it pretty much rocks the core fundamentals of an OS, and looks really good while doing it.
So, while the whole Apple EOL / pricing thing that just happened yesterday is a great lesson to learn from, the other one is, don’t ever discount keeping things simple, and the cool factor.
