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Make the Entry Easy — Then Upgrade
A key factor in pricing is the long-term value of your customer. When you get a customer to buy once it’s much easier to get them to buy again and to buy more. For this reason it’s worth looking at loss-leader pricing, but this will only pay off with a solid residual income or up-sell process in place!
When I started my software company, Marketing Commander, we offered our product with no set-up fee and no contract. This made it easy to attract our initial partners, although with each new partner we went further in the hole. As the product became more sophisticated and offered more benefits, we increased our prices and continued to build our residual income stream. Although we were not cheaper, most all of our competitors required up-front fees and contracts.
At Martial Arts America, we offered a free membership and no contracts. This was highly unusual at the time. You could sign up for four months for just $199 — but after six weeks we would go for a three-year black-belt program upgrade at $3,000.
Software companies are masters of the try it free, pay a residual fee, then upgrade to the deluxe model.
It’s a great model!
Cut up-front fees, cut paperwork, make doing business with your company painless, then upgrade them!
