I have been thinking a lot about the role of price points in web 2.0. Much of the â€˜bubble’ we hear about stems from the reluctance of those utilizing products to pay for them. It’s not even that there is a reluctance to pay something â€“ there is a reluctance to pay anything at all. Wired Magazine recently featured a cover story anointing this the free economy. However I believe that the reluctance of consumers to pay for online applications points to much deeper concerns than simply price alone. Intuitively it makes no sense to me that someone wouldn’t pay for a service product that was returning real, tangible value.
Consider the new iPhone application store. Apps are priced anywhere from free to $60. However for myself and for most of those I have informally surveyed, ultimately whether an app costs $2.99 or $9.99 is irrelevant. Under a $10 price point I’m willing to pay anything â€“ that is if I can get past the barrier or actually pulling out my credit card. The issue with monetizing web 2.0 is actually an operational issue â€“ paying for stuff online isn’t easy. And because it’s not easy, it also becomes psychological.
We’ve all seen the Visa Check Card commercials where a line of customers happily arrive at the counter and swipe their debit card — that is until someone takes out a checkbook and the music stops. Oh the humanity!
Paying for stuff online is like using a checkbook. We must fill out copious amounts of information. We get error messages. We must register as users on the site. Remember passwords. Translate captchas. It’s all a royal pain in the ass. And anyone who really knows sales knows that the thing that should be easiest in the sales process is the stuff that happens after someone signs on the dotted line. After the convincing is done. As they say in Glengarry Glen Ross,
â€œA guy don’t walk on the lot lest he wants to buy. They’re sitting out there waiting to give you their money.â€�
People want to buy. You just need to allow them to do it and web 2.0 fails.
Yes, there are other issues at play, such as the mental hurdle of not having something physical to hold and evaluate. We also tend to buy things based on stars and reviews, which are other people’s opinions, but often not our own. Still I believe that the answer to monetizing web 2.0 lies in making the payment process easy and seamless. A pay later option may be a step in the right direction, but I doubt it’s the answer.