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The new craze of outrageous pricing plans
Ridiculously expensive pricing tiers are actually a PR magnet
Hi, I’m Saurabh👋. I write in-depth analyses on the growth of popular companies. I cover their early-growth strategies, current growth levers, and the business-building lessons we can learn from them.
Plus, every Friday, I bring you a 3-minute email on one powerful growth strategy that fuels the world’s greatest companies. Join the growing community of readers from Uber, Amazon, Flipkart, and Cred getting byte-sized growth strategies weekly.
Read time: 2 minutes 3 seconds
Outrageous pricing is a pricing tier that makes no sense. Something that arches your eyebrows and creases your head. At first, it sounds so counterintuitive, doesn’t it? As if it would push the customers away.
But in today’s market, it is working wonders for brands.
The most recent (and famous) example of outrageous pricing comes from Tinder. The swipe left or right match-making app has introduced Tinder Select. For a whopping $6000 a year, users gain “VIP” privileges of sending messages without needing a match. The catch? It’s only available for the top 1% of active users.
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Tinder Select
Tinder is not the only one riding this bandwagon. In 2017, Tiffany launched a new ‘everyday objects’ collection offering a $1000 tin can, and in 2013, Uber offered a crazy $3000 on-demand helicopter ride to the Hamptons for July 4.
Tiffany’s $1000 tin can
Outrageous pricing can create momentum. Imagine, in India, Zomato offers 500 kg laddu delivery from the famous “Thaggu ke laddu” in Kanpur for INR 50000. That would be news!
Why do brands go for outrageous pricing? Let’s find out below. 👇
😯 Why ‘Outrageous Pricing Strategy’ work?
📱Create headlines: Outrageous pricing gets people talking. People love sharing posts that arch eyebrows. People went crazy sharing how their thoughts on the ‘tin’ can such as "For when you have way, way more 💰 than sense,"
👌The Veblen effect: People associate higher prices with superiority, exclusivity, or simply, of higher value, even if that’s not necessarily the case
🕺 It’s About Status: It’s a flex to show off that they are a part of an elite list. (similar to Playboy party invitations from Hugh Hefner). For anyone who buys your outrageous pricing product/plan, double down on the complete purchase experience. Most likely, anything and everything related to it might land on social media.
⚓ The Anchor effect: Outrageous pricing sets a high anchor in people’s minds making everything else seem like a great deal. Plus, it creates a high chair status for your brand.
🧲 Attract the power users: Your affluent power users are likely to choose outrageous plans. This makes a flywheel for you to segment and grow these high-income users.
To read hilarious reactions to Tiffany’s tin can: go here
Until next time! 👋
Saurabh
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