[GCA10]

The article hits its stride at paragraph 14, where they talk about the importance of "value-based pricing" rather than "cost-based pricing."

My wake-up moment came in 2013 or so, when I was pricing the digital version of a long-ago print book I'd written. ("Merchants of Debt"). I knew that it kept finding a niche audience among investment bankers and people who want to be investment bankers.

E-book prices were dropping, and I wanted to get full value from my best customers without seeming out of step with the market. After all, most finance types can afford to be price-insensitive, but they still want to feel like they're getting good value. The solution was to create an unabridged edition for $9.99, and a condensed edition (about 40% of the content) for $3.99. Truth is, the condensed edition gets very few orders. But the fact that it exists makes it much easier for serious buyers to pay up for the full edition.

Knowing the customer's frame of mind -- which usually is quite nuanced -- is the key. Especially when, as the Sequoia folks point out, the marginal cost of another digital copy is always very close to zero.

[duxup]

I fall for this time and again.

I want to buy a board game. I've already decided I'm buying it but hey there is a deluxe version for a price I wasn't planning to pay... so yeah I buy it.

[sah2ed]

> I fall for this time and again.

That tactic is called price anchoring and the reason it tends to work on a lot of people is because it relies on a cognitive bias called anchoring [1].

[1] https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias)

[ludocode]

Interesting example. With board games I avoid the deluxe versions because they're often incompatible with expansions. Power Grid and Settlers of Catan come to mind.