Last night, I went to the Odeon with my family. I almost paid £10 for a ticket to see the movie, when I noticed they had a deal on. I could pay £10 for a ticket to see one movie, or I could join their new Limitless scheme.
For those of you who have never come across this, instead of paying each time you see a movie, you can pay one monthly fee and see as many as you like. For just £17.99 a month I could go as often as I like. Bargain!
Even although I understand and teach the psychology of these pricing techniques, I still buy into them. This is the power of pricing like this. Odeon have been very, very clever about this.
Lets take a side step first and talk about the normal catches of these subscription services. Things like Netflix, Audible and gyms all use these subscriptions. They know that the psychology is that people tend to over estimate how often they will use these services. Generally, you make full use in the first few months and then it tails off while they still collect the same fee.
I tell myself that I’ll go to the gym 3 times a week, a bargain at £30 a month. Before I know it I’m there once a week, and then a few times a month. From the gyms point of view this is great. I’m paying £15 for a one hour session that costs them a minimal amount.
Odeon have taken this a giant leap forward with Limitless. Not only am I likely to overestimate my usage, and therefore underestimate my savings, but they have another massive bonus that we can use in our services too.
As a regular cinema goer, I have the choice, locally, of Odeon, Showcase or Cineworld. By selling me this ticket, Odeon have made sure that there is only one place I’m going. Odeon.
Odeon make a tiny amount of their profit from ticket sales. Where they really make their money is the concessions. Sweets, drinks and popcorn. Cha-ching!
The more I go, the more treats I buy, the more profit they make. It’s really an amazing achievement. What Odeon have done is bought customer loyalty, and made sure I’m paying for it.
So how can we use this technique in our business?
Most bookkeepers target clients who don’t want to do their own bookkeeping. After all, that’s where the money is. What if we were able to harness the other, untapped, audience. The business owner who wants to do it themselves.
Bear with me here. Imagine my local builder wants to do his own bookkeeping. After all, he’s only just started. Most bookkeepers will ignore him until he realises that he hates doing his bookkeeping. The problem here is this is when that bookkeeper is competing with every other bookkeeper.
Imagine we offer the builder a low cost subscription service where we give him access to some cloud bookkeeping software, and maybe some training videos or regular bookkeeping updates. We can then upsell our support services, payroll services, credit control, training and ultimately our full bookkeeping services to a client we may never have won had we waited. By selling a low margin service, can we make sure we’re better placed to sell our really high margin services with no competition?
I’m really interested to hear your thoughts on this. Is this something you would consider doing in your practice? Maybe you already do it? Leave a comment below.