Pricing is Product Management – $450 Chase Sapphire Reserve sells out

Value-Seekers Warm to a $450 Annual Credit Card Fee – New York Times.

This is really interesting to me. Not because I’m going to run out and spend $450 on a credit card – but as a product manager.

Many product people assume a price sensitivity which is greater than the market actually feels. Chase now has three price points on their rewards cards – free (Chase Sapphire), $100/yr (Chase Sapphire Preferred) and now $450 (Chase Sapphire Reserve). The $450 price is on par with the MasterCard Luxury Card (formerly Black Visa) promoted by Barclays, and significantly lower than the Amex Centurion ($2500/yr). Even more interesting is the fact that Chase has not heavily promoted the card – it has gone viral through word of mouth. And in a world where consumers are saturated with messages, the ability to successfully use word of mouth marketing is gold. Or should I say Sapphire? πŸ™‚

 

Chris Anderson on Free

We get a sneak peek at Chris Anderson’s new book Free on wired.com. Free is a fact of life, and if you’re a software developer like I am, you’re competing with free. This is also true for other media and content developers – so instead of whining about how it’s impossible to compete with free or make money off free, the thing to do is start doing it. Dasani is tap water, yet they make money selling it. JBoss and Red Hat both offer free software – and yet they’re very profitable businesses. Wired has a wiki page for content providers describing ways to make money from free content. For service providers, I would add the following ideas:

  • Upsell and cross-sell additional products and components
  • Sell warranty plans.
  • Sell customizations
  • Sell professional services, such as installation and support.

Free Shipping

Free Shipping from Amazon
Smart Money is talking up free shipping in their latest issue:

Surveys suggests that many consumers are obsessed with free-shipping deals. “Fifteen percent off might be a better deal, but people prefer free shipping,” says Dealnews.com CEO de Grandpre. The good news: It’s getting easier to get bargains.

When in doubt, remember “math is hard.” The optics of free shipping are compelling – even I get sucked in to spending “$11.43 more to get free shipping on Amazon.”