Pricing: floor, reference, ceiling
Introduced| English | Meaning |
|---|---|
| cost-plus/kɒst plʌs/ | setting price by adding a markup to cost |
The only lever that is pure revenue
- A 1% price improvement flows almost untouched to profit — no other marketing lever can say that. Price is also where cost, competition and value all meet, and the honest marketer states which one they are following.
- The ladders: cost floor £3.10, cost-plus £4.34, bundle £5.80 effective, shelf £6.50, rival £6.90, stated WTP £7.20.
Three bases, one architecture
- Cost-plus covers cost plus margin — and underbids the value. Competition-based follows the rival. Value-based captures a share of the surplus created.
- The honest sentence: the floor is cost, the ceiling is value, the rival sets the reference — we set the architecture.
Which basis is this price standing on?
Sort pricing moves by their base - cost, competition, or value - and spot the ones that ignore the ceiling.
Cost-plus at 4.34 is honest but wrong for Nimbus because:
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The floor is not the answer; it is the STARTING point. Value-based pricing asks what the solved evening is worth - then captures a share.
Match each price to its base.
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One ladder, four bases - the sheet says which rung every number stands on.
The bundle's arithmetic
- £29 for 5 meals = £5.80 effective; CM = 5.80 − 3.10 = £2.70 ✓. The two-meal minimum protects the picking-apart of the bundle.
- The shelf £6.50 keeps the anchor high: £32.50 à la carte → £29 reads as the deal. Price architecture is arithmetic in the customer's head — use theirs.
Bundle 29 for 5 meals, variable cost 3.10 a meal. The CM per meal, to two decimals?
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$29/5 = 5.80$ effective; $5.80 - 3.10 = £2.70$ - the subscription's engine.
Five meals at the 6.50 shelf price cost how much, to two decimals? And the bundle saves how much?
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a la carte $5 \times 6.50 = £32.50$; the £29 bundle saves £3.50 and one decision. The anchor does the persuading.
The survey's 7.20 median WTP is the price the market will bear.
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Stated WTP always overstates revealed WTP - the same intent gap as unit 7.1. The 6.50 shelf and the funnel's behaviour set the real bounds.
Why the two-meal minimum on the bundle?
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Bundles trade price for commitment; the minimum is the commitment's guard-rail - protecting the 2.70 CM from cherry-picking.
Penetration with a reversion date
- Launch month: first 100 subscribers at £24.80 (£4.96 a meal, CM £1.86) — deliberately spending 100 × 5 × £0.84 = £420 of contribution to seed reviews, referrals and the cohort.
- "Reverts to £29 in month 2" is written on the sheet — penetration without a reversion date is just a price cut with a story, and the churn AT reversion is itself a measurement.
Launch price 24.80, variable 3.10. The CM per meal (two decimals) and the 100-subscriber contribution spent, in pounds?
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CM $= 4.96 - 3.10 = £1.86$; spent $= 100 \times 5 \times (2.70 - 1.86) = £420$ - an investment with a reversion date.
Month 2: the price reverts to 29 and 31 of 100 launch subscribers churn. The honest reading?
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Penetration buys a cohort; the reversion prices it. The survivors are the campaign's real base - and the churn rate at reversion is the promo's honest bill.
Three pricing slips
- Averaging shelf prices into a bundle without the minimum-order protection.
- Confusing stated with revealed WTP. The survey says £7.20; behaviour always lands lower.
- Discounting forever. Promotions are loans against the brand.
Recap
- Floor = cost, ceiling = value, reference = competition.
- The bundle trades price for commitment at £2.70 CM.
- Penetration has a reversion date — and the reversion is measured.