It is a truth universally acknowledged that a visit to Ikea must always include a meal of Swedish meatballs. While waiting in the meatball queue in one such visit recently, I snapped a photo of Ikea’s meatball pricing model, which bears a striking resemblance to the pricing model used by 37signals. Click on the images below for a larger image.
The 37signals pricing model for their most popular product, Basecamp, offers the “basic”, “plus” and “max” pricing plans equivalent to 10, 15 and 20 meatballs at Ikea. Upgrading from 10 to 15 meatballs only costs 13% extra, while the next upgrade costs 23%. At 37signals, add 100% to go from basic to plus and 200% to go from plus to max.
The mid-level pricing plan at 37signals has the tag-line “Most popular, best value” while Ikea goes one step further and highlights their 15 meatball option in red.
It’s a great tactic, which I’m sure is tried and tested in various industries and covered in countless Harvard Business Review case studies. This Ikea customer at least, always goes for 15 meatballs instead of 10.
For further reading, Paul Farnell at Salted who runs Litmus wrote an interesting article on pricing in Vitamin.
Update 09/10/08: 37signals discuss their meatball pricing strategy in a blog post: Ask 37signals: How did you come up with pricing for your products?
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