Price logic

[shonenstar]

I was wondering if you guys could help me to understand the logic of how IPTV packages are priced? If a provider is able to give a 12 month package for £70, then why can't they split the price equally on a monthly basis and give customers the option to choose 1/3/6/12 months? I get that they'd make more of a profit if someone buys 1/3/6 months but they're still making a profit on the 12 month package.

Genuinely curious. Please correct any misconceptions that I have. Thanks.

 

[Prim@l]

Does a 30 day contract with a network operator cost the same as a 12 month contract?

 

[The-Guru]

and.. shorter subs are
more annoying as u have to keep renewing them. so takes more of providers time

 

[dsayers2014]

Think about it if say they had 5 customers

Those 5 customers paid £10 per month over the year £120 each. So altogether £600

Now if they purchased a year each at £70 although sounds steap is £350 for the same 5 customers

This is a big gap. If they did what you wanted and they charged it eavenly with 1 month starting at £10 a year would be £120 or was you expecting £70 devited by 12 giving you £5.84 per month?

 

[pupuqiop]

They're not going to offer one month for a 12th of the price for a year, as they want customers to commit to longer contracts so the sliding scale of prices acts as an incentive.

 

[bazcfc1]

So 70÷12=£5.83p works out £5.83 a month and paying £1.45 a week maybe a little more little less.
wonder if sly or vm will do it at that price on new deals instead of over £100 a month.

 

[channelking]

So 70÷12=£5.83p works out £5.83 a month and paying £1.45 a week maybe a little more little less.
wonder if sly or vm will do it at that price on new deals instead of over £100 a month.

Sly and VM would rather rip off customers than cater to the general audience where they could potentially get new customers.

Clearly they arent thinking of the bigger picture.

 

[shonenstar]

Thanks for your replies guys.

Since the comparison to Sly is being made, how do we determine if they're actually ripping us off? Sure, it's expensive and some customers get discounts, but how does that lead to knowing that they can sustain such prices for customers overall? Because they're paying a lot of money for their contracts too.

 

[teddybloat]

sky would love to be able to price discriminate as it costs them very little to serve one extra customer - they don't have to produce a new TV show for each customer, there is only a small cost off acquisition and set up. the product is easily served up to the extra customer for a fraction of the cost of production. also there is no danger of you reselling the product. its a perfect market to maximise volume on sensitivity to price. if they could manage it.

so if they could magically read your mind and say shoenstar would pay up to £60 pm then that is what they would offer to you

now the nice couple down the road are not price-sensitive, they will pay £100 pm

but they cannot advertise two prices. they can only advertise one so what they will do is bury offers in places that savvy shoppers will look for. and then advertise full price with an introductory offer elsewhere.

then at the end of the contract the price-insensitive people won't negotiate. and you will and so the retention team can make sure cost-aware customers pay less than people who are not price sensitive.

who is getting ripped off? well, it depends on your perspective.

if you are paying £100pm then you must value that service more than you value the £100. so you are getting a good deal. you could get better if you tried, but you are voluntarily exchanging money for a service that you value more than the price you are paying for it

 

[shonenstar]

sky would love to be able to price discriminate as it costs them very little to serve one extra customer - they don't have to produce a new TV show for each customer, there is only a small cost off acquisition and set up. the product is easily served up to the extra customer for a fraction of the cost of production. also there is no danger of you reselling the product. its a perfect market to maximise volume on sensitivity to price. if they could manage it.

so if they could magically read your mind and say shoenstar would pay up to £60 pm then that is what they would offer to you

now the nice couple down the road are not price-sensitive, they will pay £100 pm

but they cannot advertise two prices. they can only advertise one so what they will do is bury offers in places that savvy shoppers will look for. and then advertise full price with an introductory offer elsewhere.

then at the end of the contract the price-insensitive people won't negotiate. and you will and so the retention team can make sure cost-aware customers pay less than people who are not price sensitive.

who is getting ripped off? well, it depends on your perspective.

if you are paying £100pm then you must value that service more than you value the £100. so you are getting a good deal. you could get better if you tried, but you are voluntarily exchanging money for a service that you value more than the price you are paying for it

Makes sense. Thank you.