Digital Marketing Price

Pricing tactics as part of the digital marketing Mix

What is unique about pricing for the Internet?

The digital marketing mix is simply an adaptation of the traditional marketing mix, and ‘P’ for price. However, the Internet has influenced how online businesses price in a number of ways.

• Pricing variations e.g. budget airlines selling tickets online where the first tickets bought are the cheapest, and the last ones bought tend to be more expensive.
• Optional product pricing e.g. selling a holiday online with travel insurance.
• Captive product pricing e.g. once you buy virus software from one brand, your updates must also come from them.
• Product bundle pricing e.g. buying Internet access which comes with free online phone calls.
• Promotional pricing e.g. Betting incentives, such as free Dollars to gamble online for current customers that gamble on football games to tempt them to play online poker, or vouchers with codes sent by e-mail as rewards e.g. Amazon.com.
• Geographical pricing e.g. Microsoft pricing in different currencies in different international markets.

• International pricing and competition give consumers access to the lowest price for any generic good. For example, British consumers benefit when buying products from the United States since there are almost two Dollars to the Pound. Conversely this makes British goods more expensive to the American consumer. So it’s cheap to buy spectacles from a US website and then to import them into the UK (even including transport costs and import taxes).
• Online auctions are a popular and innovative way of pricing, for example eBay. Here you register with the online auction company as a seller and/or a buyer. You can place an item into auction where buyers bid against each other. The highest bidder wins. The auction website takes a commission. The commission is factored into the price you pay.
• Greater access to pricing information, more quickly and in a format that makes pricing comparable and transparent. There are a number of sites that will compare and contrast prices for the same or similar goods and services e.g. prices on car insurance.
• Pricing could also include the cost of an online advertising medium such as Google Adwords. Here an online supplier would buy a keyword located in a text or image based advert onto Google’s own search engine or onto a website belonging to a Google publisher. For example you search for the term ‘hair straighteners’ on Google and you are directed to a site about hair dressing. On this site is plenty of information about hair straightening, placed next to some contextual adverts. You click on the advert and are taken to a site selling hair dressing supplies. You buy the hair straighteners, and your suppliers pay a small ‘pay- per-click’ fee which is split between Google and their publisher. This is factored into the price you pay.

How are traditional pricing tactics used in digital marketing?

Of course the Internet marketer still has a whole selection of other more traditional pricing approaches to choose from that can be adapted to digital marketing scenarios:

• Premium pricing e.g. selling music via iTunes.
• Penetration pricing e.g. giving away free subscriptions to land grab market share for new start-ups such as Youtube.com and Myspace.com.
• Economy pricing e.g. selling basic products and services online like basic web design or paperclips.
• Price skimming e.g. new product launches online such as albums or games.
• Psychological pricing e.g. products and services sold at 99p or $99.99 (Price Point Perspective).
• Product line pricing e.g. subscription 1 @ free, subscription 2 @ $10.00 (with added value) and subscription 3 @ $49.99 for 10 years.