Good, Better, Best

Good, better, best is a pricing tactic that every firm should consider.  It is an extension of versioning that takes advantage of your customers’ psychological make-up.

People who are unsure what they want, buy “Better”.

Go back and read that sentence again.  It is the crux of the good, better, best tactic.

Customers avoid “Best” because they are afraid of paying too much, and they are even more afraid of  “Good” because they are afraid to purchase the lowest quality and it may make them look cheap.  When uncertain, they buy “Better”.

Sears was famous for using this pricing tactic.

If you currently offer two versions of your product, the act of adding a third version, with the new version being at the high end, will almost certainly increase your profitability.

To you, this means that if you currently have two versions of your offering, you should seriously consider adding a third with more features at a HIGHER price (and feature level).  This action will likely sway any of your customers who were debating between buying your “Good” and “Better” to choose “Better”.  You will also likely sell some “Best” at presumably much higher profit than your other offerings.  Overall, simply adding a “Better” option puts more profit dollars in your pocket.

Action:  Look at your product portfolios.  Is there anywhere that you are offering 2 versions?  Figure out how you can add a third, more expensive higher margin option.  This will increase your profits.