Price points are one of the most challenging things in business to come up with.  At what point does something become too expensive for your target audience? It is something we wrestle with constantly. Raising the price decreases the number of buyers but not at a steady rate. The challenge is always figuring out the highest price you can sell for while maintaining the relatively biggest user base.

Sometimes pricing things too low can hurt you. People assume that a product or service is of low quality if it isn't within a certain price range.  So coming up with a good price is always a real challenge.

Over the years we've found these price points to be relatively strong:

$6.95, $8.95, $9.95, $14.95, $19.95, $24.95, $29.95, $34.95, $39.95, $44.95, $49.95, $69.95, $89.95, $99.95, $129, $149, $179, $249, $299, $499.

But not all of these price points are equally good. And their strength changes from product to product.

For example, Object Desktop, our company's primary product, is priced at $49.95.  We would prefer to have it at $69.95 but we believe that the user base would collapse.  $49.95 is something people will buy without too much worry.  At $69.95 it enters a different realm. The only reason we've been able to stay at $49.95 is because our user base has been so helpful in helping out on our forums with other users who have questions. Otherwise we'd either have to drop features or raise the price.

A more pressing one is our upcoming expansion pack for Galactic Civilizations.  We originally envisioned it being $19.95. That is a great impulse buy price point. The problem is that it's not likely to be widely distributed which changes the target demographic considerably.  So we've been playing around with raising the price to $24.95 or even $29.95.  But that price may actually decrease sales to the point where we actually generate less revenue as a result. So we're still agonizing on that.

The reason you always see .95 or .99 by things is because people, particular males, don't pay as much attention to the cents portion. Moreover, males are more likely to round down for some reason than females. Which is why you'll hear some guy say "Yea, it was like 20 bucks" with the wife correcting "It's $30" when the actual amount was $24.95 or $29.95.  But it's hard to say if that's still the case, that was from research back in the 50s and 60s and shoppers are much more savvy. 

We usually just go by our own gut reactions. Anything under $10 is basically "free". At that point it's more a matter of dealing with the obnoxiousness of on-line stores as well as factoring in whether what I'm buying is is "worth" the amount they're asking.  I'd feel stupid paying $9.95 for Q-tips. Same on skins. For some reason $9.95 on an icon package or suite seems just a tad too high. Yet $8.95 is fine even though it's only $1 less. So a lot of time you have to play it by ear.

I decided to write this article because I just couldn't find any good information or studies on the net about price points. The 19.95 to 24.95 difference is a big one for instance that many struggle with.

Feel free to share your thoughts and experiences.