Tag Archives: pricing

Apple’s OS X Lion Pricing and Distribution Domination

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Apple just announced their new operating system, Lion. I believe this will be Apple’s most profitable OS ever, not just because it is loaded with hundreds of amazing features but for their pricing and distribution strategy. They made is so easy and affordable that it will be impossible not to get it. What is interesting is the price drop also shows some insight to Apple’s overall strategy.

Apple is no longer sending out CDs. They are having you download it through the Mac Apple store. The new operating system only costs $29 (compared to $129 for Cheetah – Mac OS 10)

Main Benefits:

  1. Apple makes most of its money on hardware. More people that say “Lion is amazing” will sell more laptops. If you look at Apple’s financials hardware dwarfs everything else.
  2. I got my copy of Leopard from a friend. It was easy, he just gave me the CD. But how do you share a 4GB file? It isn’t easy… and at $29 I don’t mind just buying it myself rather than having to look like a cheapo and beg my friend for it.
  3. They removed almost all obstacles to buy it. All you need to do is click on the mac app store icon and bam! you got it.
  4. Lion has a few network effect features. For example the “Air Drop” – allows you to easily share files with people near you. People will do the upgrade as soon as one of their co-workers asks them to… no need to wait for a CD in the mail.
  5. Quicker market adoption. (the result of benefit #1, #2, and #3)

What I learned from Apple today:

  1. Make it as easy as possible to give customers your products: 1 click and as little as waiting time as possible.
  2. Make it extremely affordable so people don’t even want to cheat your system. It’s just easier to buy it and not worth the hassle.
  3. Understand where you make most of your money.

Special thanks to Ish for helping me write up this post.

Yearly Customers – A Look at Squarespace’s Pricing Page

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Shows you why Yearly Pricing RocksOne way to get more money from your customers is to charge them on a yearly basis instead of monthly. There are 3 major benefits to charging yearly:

1. No need to ask the customer for new credit card info when their credit card expires or is declined. (This is a major issue for all SAAS businesses)
2. If the average time a customer stays with your service is under a year , then by charging up front for a full year guarantees longer customer lifespan.
3. Cash in hand is worth way more than cash later. You can actually do things if you have the cash (like acquire more customers now instead of 11 months later).

Squarespace does a great job pushing the yearly plan onto the customer.

Screen Shot of Squarspace Pricing Page

My top 3 favorite things about this page:

1. By default the yearly option is chosen
2. It is clear that they get a discount when they pay yearly
3. Even though they are paying yearly they show the monthly prices

Bonus Tip: Sell the yearly plan right when they sign up. In most cases you will have lower conversions if you try to sell the yearly plan after they sign up for a monthly plan.