Market segmentation is the time-honoured technique of asking people how much money they have when they want to buy something rather than telling them what it costs, meaning what it costs is a function of how much money they have.
What you call segmentation is actually called parallel pricing. In most digital goods and services (high capital cost, low marginal cost), these can get jumbled up.
Parallel pricing pisses people off. Segmentation doesn't.
If you are not sure exactly which one you are dealing with try to figure out the goal. The goal of parallel pricing is to maximise revenue/profit from a fixed number of sales by charging closer to the maximum people are willing to pay without losing those not willing to pay that much. The goal of segmentation is usually to sell more by giving people options that are worth more to them, or at least are better price/value-wise. Segmentation doesn't require not giving high value customers access to low value goods.
People doing A will usually call it B.
If the Internet has taught us nothing else, it has taught us that:
1. Advertising pays for otherwise free services;
2. People don’t like advertising; and
3. Advertising works.
Actually, I would argue that we knew that before the internet, now we're not so sure.
Segmentation certainly pisses people off who just need that one feature that's only available in the higher version. Think of Stack Overflow and Windows Server's memory limits; memory is dirt cheap, but Windows won't let you use it all until you pony up the extra money to buy a whole bunch of other features you don't need.
Market segmentation is the time-honoured technique of asking people how much money they have when they want to buy something rather than telling them what it costs, meaning what it costs is a function of how much money they have.
What you call segmentation is actually called parallel pricing. In most digital goods and services (high capital cost, low marginal cost), these can get jumbled up.
Parallel pricing pisses people off. Segmentation doesn't.
If you are not sure exactly which one you are dealing with try to figure out the goal. The goal of parallel pricing is to maximise revenue/profit from a fixed number of sales by charging closer to the maximum people are willing to pay without losing those not willing to pay that much. The goal of segmentation is usually to sell more by giving people options that are worth more to them, or at least are better price/value-wise. Segmentation doesn't require not giving high value customers access to low value goods.
People doing A will usually call it B.
If the Internet has taught us nothing else, it has taught us that: 1. Advertising pays for otherwise free services; 2. People don’t like advertising; and 3. Advertising works.
Actually, I would argue that we knew that before the internet, now we're not so sure.