Submitted by greggles on
We recently participated in an event that included photos taken by a professional photographer. The photos are OK and they're of my wife while she's 8 months pregnant - a pretty special time.
Unfortunately, we were only told after the event that the photos would be $125 to get the high quality digital version of the file. Right, one hundred twenty five US Dollars. I have a hard time imagining that any of her customers are going to buy more than one photo. Maybe two...but that's it. We will not buy a single one. I bet a lot of her other customers are that way. So, here's what I propose:
Simple price differentiation for professional photos
The problem is that some of her customers will pay $125 for some of the photos. And for those customers it is worth it and she makes a pretty good amount of money from it. But she is leaving some value uncaptured. We would probably pay $20 for a few of the photos of us. And some of the other people would probably pay $50 for their photos.
The classic econ 101 perspective on this is that you choose a market price and go with it. Supply and demand intersect and there you go.
Graduates of Econ 102 (or marketing 101) should get into the next layer, though: price differentiation. Price differentiation is charging different prices for the same product.
I put her $125/photo price point above the equilibrium point (the intersection of the supply and demand curves) because I believe it is. That is obviously debatable, but as the $25 price point on the next graph shows, there is more money/value to be captured by price differentiation even if $50 were her price and were the equilibrium price points.
- My proposed scenario is that with price differentiation she sells those same 2 photos to make $250 and sells 5 more of the photos to folks at the $50 price making another $250 and finally sells 10 more of them to folks like cheapskate me for $25 each netting $250. Total revenue is now $750!
Obviously if she offers all the photos for $25 she will not capture the value of the people who value them at $50 or $125. So, she needs to segment the market somehow and only offer the lower price photos to the people who would not buy a photo at $125.
So, from a practical perspective, how does this work? I'm not entirely sure, but I've got some ideas. These could be used independently or in combination:
- Campaign one: lower prices over time. Just have the website automatically lower the price by $5 a week or something.
- Campaign two: offer discounts a month later via e-mail to people who didn't buy any photos.
- Campaign three: offer deep discounts a year after the event happened.
And that, my friends, is how you get rich(er).
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Annie replied on Permalink
What if she really creates
What if she really creates new products rather than discounts
Some people want the file forever, some want just the print
Some want a 10x 14 --- some will be happy with the 4x6
If she had a greater understanding of what the people that buy want with the file and what the ones that don't buy wish they had, she would know what other services/products she could offer with very little trouble (i.e. she could segment her customers by their needs/ wants and appropriately match price to the value created by her product)
greggles replied on Permalink
my own limited photo desires
I guess I'm swayed by my own limited photo desires: just the digital file. I assumed that everyone would just want the digital file and not a print/anything else but certainly if she can figure out a segmentation by other product that could help.
endlesspossibil... replied on Permalink
Sounds to me like the
Sounds to me like the photographer needs to take better pictures therefore increasing demand beyond supply. It is only when the pictures are unsatisfactory that you end up in this dilemma.
greggles replied on Permalink
wrong - price differentiation can help all sellers
Better pictures helps increase demand, but you are ignoring the fact that the aggregate demand curve is made up of a bunch of little demand points.
Every photographer can be more profitable if they do more price differentiation among their customers.
Sabbath&ra... replied on Permalink