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The Lesson in American Airlines’ Smart Pricing Plan for its Exclusive Club | Entrepreneur

ph.logo.sublogos.news.white-ARTICLEPricing is psychological. There are two types of customers in this world, or at least in my world: the ones who can’t commit (pay as they go) and the ones who can commit (subscribers). Businesses hate the pay-as-you-go types and love the subscribers. Just look at the numbers.

I’ll probably visit the Admirals Club about 20 times this year because I travel about one to two times a month. So at the $400 membership fee I paid, that works out to $20 per visit. If I visit 30 times this year that’s $13.33 per visit. Even if the club offered me the ability to just pay $20 or $13.33 each time, do you think I’d visit as much? No way.

Psychologically, if I had to fork over that amount each time, I’d be forced to consider whether it’s worth it to spend the money or to just suffer with the peasants in the waiting area with slow Internet and coffee in plastic cups instead of porcelain mugs. I’d rationalize that it’s still cheaper to get a $6 beer in the bar. I wouldn’t do it nearly as much.

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The Lesson in American Airlines’ Smart Pricing Plan for its Exclusive Club.

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