Community pricing

O’Reilly’s Tools of Change conference came and went, and there’s an interesting snippet that I forgot to blog. Tim O’Reilly describes how Logos Bible software is leveraging the web to make viable publishing decisions. Firstly, they build a business model, then email their 500,000 strong mailing list, inviting registrations of interest and pre-orders. Only when there is enough commitment from potential readers does the company proceed with the project. Real market research then I guess. The other interesting thing they do is what they call community pricing. O’Reilly describes it like this:

Here, they expose the price curve to their users, letting users choose the price they are willing to pay. Once the price crosses the line that allows them to cover their costs, they give that “best price” to their pre-order customers (regardless of which price they actually chose when voting.) They then raise the price to the point on the curve that shows best profit for Logos, for customers who weren’t part of the original subscription.  


It’s a novel (sorry) way of thinking about how to use an existing community of users to make business decisions.


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