Start Up Blog

Decision intertia

Posted in entrepreneurship by Steve Sammartino on October 8, 2009

I was having an interesting discussion with a colleague Cris Pearson (founder of Skitch & Comic Life) about pricing models on the web – as soon I’ll be changing the rentoid model.

I asked his some advice and his response was so simple it is till ringing in my ears.He said;

The more choices you give consumers, the less likely they are to do any anything.

Cross road decisions

He then went on to say ‘choose a price’ not multiple options, to avoid decision inertia. The question for startups is – what complexity barriers have we created which stop our people from buying from us?

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6 Responses

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  1. Duncan said, on October 8, 2009 at 4:00 pm

    Steve,

    I am so glad we’re not the only ones talking about this! Totally agree with what you say, and the ‘paradox of choice’ is central to the model we have created with our website (www.fumzup.com.au). Its not just that there’s so many different competing products out there, but also that marketers tend to use language that every day people don’t understand.. eg. tried buying a mobile phone lately? If you’re a true expert then there’s probably some killer features that you are looking for and you will choose your fine soon enough… but if you’re not so knowledgeable its quite an awkward experience being bamboozled by a teenager talking about features and benefits you don’t understand!

    We did some additional digging and found a couple of authors on the subject that might interest you here http://www.fumzup.com.au/news/view/5

    Duncan

  2. [...] less choice to get more sales Regular Anthill contributor Steve Sammartino published an interesting post on his blog this morning. Steve is in the process of tweaking the pricing model for his company [...]

  3. Rags Srinivasan said, on October 12, 2009 at 12:14 pm

    Steve
    While too many options are not good, just one option is not good either. Before offering options and pricing them it is important to understand what the customer values and how this differs across different segments. The goal then is to define versions and pricing such that customers will self-select themselves to the version that best suits them (and pricing them correctly ensures customers are not picking versions that maximizes your profit).
    As the saying goes, “if one price is good, two prices are better”
    -rags

  4. Steve Sammartino said, on October 12, 2009 at 12:42 pm

    Rags,

    That may be true, but it seems the further I look I see brands with simple / singular propositions that are working. It’s certianly easier to explain a new business or startup with less features / confusion.

    Steve.

  5. Rags Srinivasan said, on October 13, 2009 at 11:45 pm

    Steve
    quick note to point you to new Ad Age report that found there is no one customer profile.
    (you should be able to find the link in Ad Age website)
    ‘The message to marketers is clear: No single demographic, or even handful of demographics, neatly defines the nation. There is no such thing as “the American consumer.”‘

    Simple is good but it makes it harder for marketers to position one offering for all segments. Unless of course you do mean target different segments differently but keep the offering to that segment really simple.

    -rags

  6. Steve Sammartino said, on October 13, 2009 at 11:54 pm

    Rags,

    I see your point, ans I agree with it in context. But, this is not a demographic question. In fact demographics has nothing to do with it, neither does consumer segmentation or positioning. It’s about sequence and reducing complexity in order to encourage desired behavior.
    Steve.


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