It usually comes down to cost.
Trying to convince a potential customer that the cost of a product or service is worth it can be difficult, especially in a strained economy with tighter budgets. Below are a few paragraphs from an article by Rafi Mohammed that discusses how reworking pricing plans can have a positive impact on your business:
"Pricing is one of the most powerful, yet underutilized strategies available to businesses. A McKinsey & Company
study of the Global 1200 found that if companies increased prices by
just 1% and demand remained constant, operating profits would increase
on average by 11%. Some companies can profit even more; A 1% increase
at Sears (SHLD),
for instance, would raise profits by 155%. Just as important, price is
a key attribute that consumers consider before making a purchase.
Many
times customers are intrigued with a product or service but refrain
from purchasing simply because the pricing plan does not work for them.
Instead of making an outright purchase, for instance, some may prefer
to rent, lease, or interval own. Offering a new pricing plan opens the
door for new customers to purchase, generating blockbuster growth.
Pick-a-plan pricing tactics can be categorized as providing ownership
alternatives, mitigating uncertain value, offering price assurance, and
overcoming financial and other constraints.
Some customers are
interested in a product but can't afford it or don't need to own it.
Alternatives include interval ownership, leasing, rental, and the
Netflix (NFLX)
model. The interval ownership concept has broadened the market for
private jets and vacation condominiums. Many automobile customers
prefer the convenience and upgrade benefits of leasing. The co-owner of
Frank Kent Cadillac in Ft. Worth, Tex., told The Wall Street Journal that leases used to account for 65% of its business, according to a 2009 article. Companies such as Zipcar are innovating on the rental concept by offering hourly rentals to serve new customer segments: urbanites and college students."
You can read the article in its entirety here.
-Brianna