Perceived value, freemiums, and threshold resistance
Hi Everyone,
thanks for the interesting discussion here and elsewhere.
One thing that's worth noting is the difference between perceived value and cost. When there is pushback on pricing, as there is here (and was on the much maligned desk set), the consumer is saying that the perceived value is low relative to price. It does not matter to the consumer how much the cost of production was or how long it took to produce the item, the care that went into it and so on, it is only the consumer's perception of value that matters in the purchasing decision.
Another aspect of this issue is the "freemium" model that all businesses are up against these days. The diagram itself has circulated widely on the internet. We all can get the diagram for free if we like. And that free-ness has influenced the perception of value--in effect, the offering became devalued because of its wide, cost-free availability.
Finally, there is a matter of audience and threshold resistance. Alfred Taubman (retailing mogul) talks about what he calls threshold resistance: the physical and psychological barriers that stand between the buyer and the purchase. When the desk set came out, I began to wonder who the audience was meant to be. Most of us are not CEO's pulling in six-figure salaries. We're regular Joe's and Jane's. Some of us consider being a member of Connect as a luxury. An item that is high priced, far beyond what its utility and availability would suggest, doesn't land well. In other words, the threshold resistance is set at what appears to be a high level relative to the audience.
The unknown is the abundance of the audience for whom the threshold resistance is low. If there are many consumers who appreciate the value, and for whom the cost is trivial, all is well. Time will tell.
Best wishes,
Tara
