Sunday, December 30, 2007
Same product, different prices
While finishing a load of laundry this morning, I had the TV on and up popped an ad for this amazing new product that can bond anything. I mean, ANYTHING. They're examples and demonstrations were impressive and it this miracle bonding product was cheap - two sticks for just $19.95. No, make that four sticks for $19.95 - they doubled the order. Sweet! But wait! Why double when you can triple! Yes, that's SIX sticks for just $19.95 (plus $8.95 shipping/handling).
Of course, the product is nothing new. Plumbers and handy men know the epoxy sticks well. Its cheap, easy to store and super easy to use. Bonds under water, has amazing strength when cured and can be easily sanded for a nice finish. You can find 4OZ sticks of this product at any hardware store, and find it online anywhere from $5.25 to $7 per stick.
If you happen to surf or windsurf, then you know this product by a different name. DingStick. I've holed boards sailing, came in, fixed the damage and was back out on the water in under 10 minutes. Great stuff. Of course, I just buy mine from a hardware store since I don't care to pay double for something just because its got a different name.
Marketing is an amazing trade. Taking the common and repackaging it into something "different" and being able to get a better price and margin for the exact name product(s).
We used to joke than when we'd go to a Gartner event, we raise our prices so that the enterprise IT guys would take us seriously. After all, how could an anti-spam system be effective that only cost $1999?? Strange but true - enterprise IT guys think that expensive means better. Then again, they get their power and control is based on the size of their budget and products like MailFoundry don't exactly burn through budget with our low cost.
Does your company have a product or service that has more value to a different market? Are you selling the same product to all markets when you could be selling custom products to multiple markets and garner better margins on some? Should we offer a "high end" version of MailFoundry to accelerate marketplace adoption in the Gartner space?