Dougjn, yes, there is plenty of pent up demand, which will have a range of values depending on individual needs. $3000 per phone was how much the original cellular handsets were and cellular was hardly a marketing disaster.
To deviate from pricing purity, you need to have reason. Suppose we go for a Russian Communist Allocation model. Who do you propose to deliver the first 200 handsets to? I say the highest bidder. If you have a low fixed price then there are going to be a lot of bitterly disappointed people who didn't get a handset because they weren't a mate of somebody in the supply chain or didn't pay an under the table bribe to somebody who was the commissar in charge of lists. Maybe we could get a latter day Schindler to draw up a list of favored Globalstar users.
I accept that some people would pay a premium for dealing with known pricing. For them you could sell them a handset at $1000, with a 3 year contract, fixed at $1000 per month unlimited calling, 24 hours a day. How's that for impure pricing?
You could also offer a phone, with no contract required, at $1500 and a fixed per minute charge of $1.50 per minute anytime.
Don't forget plan C, a phone at $2000, no contract, peak pricing at $2 per minute and off peak at $0.50 per minute.
And, my fixated favorite, "CURRENT PRICE IS...." where you bid for a phone and pay what the market will bear for the handset and the minutes you use. With this plan, calls would be nearly free for the first two or maybe three years as demand builds, other than maybe peak times. But, handsets would be a really high price. After 4 years, handsets would be cheaper because call prices would have gone up to around $1 per minute average. By then, extra constellations would be underway and the whole thing becomes a huge developing market, with new launches as demand justifies it. As spot prices reach $2 per minute, a new constellation could be launched to push prices back down to $1 per minute, or maybe less.
There would need to be some careful arithmetic done to ensure sufficient supply was provided to avoid competitive inroads taking too many customers. The final price will be the long run marginal cost of adding another subscriber [to use some economist jargon].
The absolutely vital thing is to get this system full and dropping massive dollars into the bottom line as soon as possible.
You are right, consideration of human psychology is vital to maximize profitability. Human psychology is a variable thing, which depends on the time of day, income, mood of the moment and all that. We do not all fit into a single size. We each need our own plan. 4 plans is a reasonable choice and most people would happily fit into one of them.
When you have pent up demand, the facts of life are that initial prices will be high. Did you ever get involved with buying computers 10 or 15 years ago? Or calculators in the early 70s? Or cellphones earlier this decade. The only way to resolve pent up demand outside the totalitarian systems is by price.
There you are, I"ve sacrificed half my pure pricing model to fixed price plans. Half the subscribers on a market price plan would still give the system the flexibility it needs to maintain high quality service at all times. With no flat batteries.
See, it's not so terrible at all when you think it through further. Sure, initially people will gulp at the price and stick with pigeon post, but they are well used to sticker shock with all the fancy new gadgets - they know to wait for their turn to come as the price drops.
I think $3000 is too cheap actually. $10 000 for the first few thousand is probably appropriate - but the bidding on the day would give the real figure.
You said, "One could/should start pricing at perhaps .50/min at least in NAmerican, given its competive roaming situation. Demand would be huge.... the gradually ramp up." Nope, stick with a free market price for the variable price plan. It's the only way to get handset supply enormous quickly. The rate of handset production will depend on the profit coming from each handset. If it is $5000 per unit, Orbitel and Qualcomm will put all their resources into getting handsets out before the other grabs the customer.
Fair enough?
Maurice |
