36. The Psychology of Pricing
Shit You Don't Learn in School
Retention Base Pricing
The idea of retention base pricing stemmed from the observation that a lot of businesses focus more on getting new customers and rewarding them, verses retaining existing customers. Imagine if instead of ne flix being 12 dollars a month throughout the whole course of a subscription, it started at le say, 18, and then it went down to eight dollars a month where every month it reduced in price by a dollar. So it's rewarding people who have been around for longer. And it also could reduce churn by people being locked in at a certain price.
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