A piece of cake or the whole cake?

Pricing a product always seems to be problematic.  You can’t always price it on the high end and expect to be the luxury good and you can’t always be the “value leader” with the lowest price and expect people to come flocking to you.  Early technologies tend to price themselves at the per unit cost.

For example, in the early days of online storage and backup pricing was almost always centered around usage and still is by some companies.  1GB for X dollars, 10 GB’s for Y dollars.  As the market matures, it drifts to the proverbial “all-you-can-eat” plans which provide unlimited backup so consumers don’t have to worry about quotas of any sort.  I remember when my cell phone plan had 60 minutes and my phone had a reminder beep 10 seconds before another minute ticked by.  Now the cell phone market is rapidly progressing to unlimited plans.

Two observations:

  1. Nearly all utilities (water, gas, electricity, etc) are based on actual usage except broadband internet.  Why is that?  Internet is much cheaper do deliver than power.
  2. Would there be a profitable model in offering an NSF package or Courtesy Pay package in which a member would pay a fixed fee for unlimited NSF’s or overdrafts?  Could this be an additional line of fee income for struggling CU’s that could make their members who use the service happy while at the same time boosting their bottom line?

3 thoughts on “A piece of cake or the whole cake?”

  1. Robbie,
    The problem is that you still have to draw a line somewhere with overdrafts. Right now that line is drawn at 0; if you put a plan like you are suggesting in place where do you draw the line again? I think you may be on to something, but eventually I see people further down the road (further in debt) still having the same problem simply because they lack SELF-DISCIPLINE (before anyone goes haywire on me that is the same reason that I weigh 50 lbs more than I want to and have more debt than I should). (Just my $.02)

  2. Robbie,

    I just heard a CEO/Executive Team Network speaker say this week that there’s a bank planning to offer an unlimited overdrafting account for something like $20 per month. Unfortunately, I don’t know which bank.

  3. It sounds like a great source of income, but potentially an opportunity for losses. If one person walked away from a -$1,000 balance is washes away 50 months of $20 fees.

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