Pricing Strategy

The other day I wrote about being excited that there was good music to be had legally and fair prices from (Fair Enough). Yes, there are many good albums for $5 and less, which you can download instantly and that is the good news.

The not so great news is that’s pricing strategy doesn’t always make a whole lot of sense. For instance, today, August 17, 2010, two items cost you the same whether you purchase physical media or the download:

  • Vapor Trails, Rush – ¬†$7.98
  • Counterparts, Rush – $9.98

And this is when their pricing strategy stops making sense to me. You can get free shipping for orders of $25 and above – that is, it’s free to you, but it costs someone money (in this case, Amazon, obviously). Why wouldn’t they factor their shipping expense out of the cost of the physical media? Perhaps they assume that most people will be stupid enough to not pad their orders to $25 so that they can get free shipping, or that most people will have bought Amazon Prime membership. That would drive people to opt for downloading at exactly the same price. (Well, they have the hard data to make a judgement, so I am quite possibly wrong here.) Not to mention that if you buy the media, you have to wait a few days to get your music, which is anathema to our entitlement and instant gratification culture.

My hypothesis is that they price media and download equally because they assume people would be more likely to buy single items this way. Perhaps this works wonderfully well in times of economic downturn. ¬†Several hypotheses, no conclusion for me except that in a case like this, I’ll opt to buy the media, with the old fashioned paper insert and the physical sense of ownership. I may be in the minority, but the small wait doesn’t bother me at all. Amazon could have saved a couple of bucks in shipping and handling…

It’s even more interesting that as soon as I place the order for physical media, Amazon send me email to say that I earned $1 to apply toward the purchase of music downloads! This only adds to the nonsense that I had already observed and gets me more confused. I should have studied marketing or game theory.

As to why I’m buying four Rush albums in the same week (downloaded one at $5 and ordered a third CD that cost me $2 more than the download), that’s something to be discussed in another post.