Originally posted by
Jim Sachs:
Pricing is always tricky.....I picked $20 as a price because it seemed to me that it's something that most people could afford....I was hoping that someone would try different price-points so I could use them as a test-case......When the price was lowered, the volume went up a proportionate amount so that revenue was virtually unaffected. But when you increase sales by lowering prices, you have a lot more customers to deal with and need to pay more people to deal with them....
You've described the Economics 101 (that is where I learned about it) ideal supply-demand model perfectly. So if revenues remain constant when the price is dropped then I'd recommend increasing the price to $25 since you will make more money.
Let me preface my next comment by noting that your behavior in the marketplace demonstrates one of the highest ethics I have seen. We need more such business people in the country.
But I did not feel cheated when Apple dropped the iphone price from $600 to $400, I did not feel cheated because I got no upgrade credit for Leopard, and I would not feel cheated if you charge $25 for MA3, because IMHO it is a new product, not an upgrade. Adding fish to a tank, that is an upgrade.