Pricing Is A Talent

wifiIn full disclosure, I am not a fan of Gogo Inflight Internet service. I am a fan of wi-fi equipped airplanes, and of being able to access the Internet and email in the air; just not of Gogo. However their pricing strategy is illustrative … in more ways than one.

If you have never used Gogo, I will explain how their pricing page works. If you have, you may or may not have noticed the strategy behind their pricing page. When their pricing page first comes up they offer you a few pricing options. In my opinion they are not usually the best value.

For example you may be on a 5 hour flight. They will offer 2 hours plus one free at a price, maybe $24. This is 3 hours for $24. However, if you click on the “see all pricing options” button which, while not hidden is not prominent, you may find you can buy the entire flight for $26. How does this help them?

One might assume they would prefer you bought the full flight since the incremental cost to them of you using the service for 2 more hours is likely quite small. However, I assume, based on how the offer is presented, that they have found it quite lucrative to sell you the 3 hours and then get you to buy one or two more when you run out. Those last two hours will cost a lot more than $2. Clever or…?

People don’t like being manipulated. If Gogo was a transaction they might be able to get away with it, but for many (most) it is used more than one time and once you discover the “hidden” pricing, you might feel taken advantage of. Or maybe that’s just me.

Further to this pricing strategy, I find their customer service (excuse me, they refer to themselves as Customer Care) people are similarly manipulative. On a recent transcontinental flight I bought full flight service for $30. (This was on the high side because their pricing also varies by the airline you are flying.) The service stopped working immediately after they billed my credit card, and did not work again for the entire flight. (Another issue I have with Gogo is their spotty service.)

I sent them an email once on the ground in response to their invoice asking (no, demanding really) a full refund since the service was not provided at all. Customer Care sent an email back several hours later generously offering me a full flight pass on another flight. Problem is a full flight pass on almost any flight I take will be worth less than $30. Pissed me off. I said no thank you and again demanded a full refund. Why not create a happy customer by offering me two flight passes? Instead they try to trick me. How is that good business practice in a non-single transaction business?

They operate as if they have a monopoly. They did, but Southwest has their own service now and my understanding is that United will too. Gogo may have to change some of its operating practices to survive, but their approach to presenting pricing offers is educational.

Mitch

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This entry was posted in airlines, customer service, Pricing and tagged , , . Bookmark the permalink.

One Response to Pricing Is A Talent

  1. A great example of bad profits. Important points to consider when building pricing packages.

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