Thursday, November 7, 2013

The Rule of Pricing Equivalency

The rule of pricing equivalency says "Similar items should be priced similarly".  This especially comes into place when size is an issue. Take, for example, soda and bottled water.

when you buy a bottle of water, you get....water. When you buy a bottle of soda, you get.... water, flavoring, carbonation, sugar (or other sweeteners) and flavoring.  Yet customers willingly pay the same price for either, because they are the same size, even though you get much more with the bottle of soda.

Same thing with games.  Customers willingly pay $24.99 for Munchkin, even though it has only a deck of cards and a rule sheet (and a reputation).  However, I can point to a number of games that have come out packaged smaller than Munchkin, with similar contents but with a price point twice as much, that just sit there.  Why?  Equivalency.  Unless either the retailer or the publisher works to show the customer why the game in the smaller box is worth more than Munchkin (and this is where promotion comes in), the customer is going to look at the two boxes, see the $24.99 price point on Munchkin, see the much higher price point on the other game and decide the game is not worth it. The customer doesn't know anything about printing costs or economics of scale or branding, they just know that they have two games in front of them that look the same size with the same contents, but one costs twice as much.  Which one do you think the customer will choose?