The April 2010 issue of Harvard Business Review includes a brief mention of a study by Michael Tsiros and David M. Hardesty. The two argue that retail products can gain greater total revenue by raising prices in several intermediary steps.
Tsiros and Hardesty also found that the staged approach appeared to improve consumer acceptance of the higher prices. Published earlier this year in the Journal of Marketing, their research can be purchased through Atypon ($24).
The report brings to mind comments made by Michael Tamblyn at this year’s BookNet Canada Technology Forum. Reflecting on agency pricing, he noted that publishers gain the ability to test prices, but most are not staffed to either conduct or analyze the results of such tests.
As Tsiros and Hardesty reveal, there is nuance in the marketing decisions around price. Simply trying to go “higher” is not always the best course. As publishers change the model they use to set market prices, they’ll need to keep the perspectives offered by Tsiros, Hardesty and Tamblyn in plain view.