Flack wrote:There's probably some truth to that. I sell more e-copies of my books now that they are priced at $2.99 than I did at $0.99.
There's a sweet spot in pricing where you get the best net revenue for the product. Pricing is an art; price too low and people may think the product is shoddy
and you lose money that you could have made. Price too high and you're out of the market.
One company developed a really good product, a hair spray, I think, and their pricing consultant told them to double the price, the price they were going to charge was too low for something of the level of quality their product was perceived to be.
Turned out he was right; the company's new premium product went on to record sales (and, of course, record profits.)
[Note: The following paragraph was edited to correct it to match the numbers in the article:]
Joel Spolsky speaks about this a bit in an article in his column,
Joel on Software, in that you don't see $1000-$5000 software packages any more, because above about $1,000 it's a commercial product, and at that point you need a purchase order and
multiple sign offs. So, instead, the product gets priced around $75,000 to cover the cost of a professional salesperson and all the overhead and so on. This means that companies' attempts to prevent being overcharged have ended up
vastly increasing the price of expensive software packages.