The Placebo Effect ... on Pricing

OK, so here's an interesting dilemma for many businesses out there, including us here at IPOWER.

I just read this fascinating article from The Washington Post on "The Price-Placebo Effect." Most people understand the Placebo Effect as it pertains to medication studies: "control" participants are blindly administered a sugar pill instead of actual medication, and yet still experience improved symptoms, probably as a result of their belief that they have received real medication.

The Price-Placebo Effect takes the same tack, but instead of medication being the agent of change, price is strangely the culprit. The Price-Placebo Effect, according to the article, is basically the notion that people experience more pleasure (i.e. larger activation in their medial orbitofrontal cortex) when they consume a product that they pay a higher price for, compared to those who pay a less-expensive price.

While the article leads off referencing the uncomfortable Eliot Spitzer scandal, the more relevant story revolves around a study in which two groups of participants were asked to drink some wine: one group from a bottle priced at $90, and the other group from a bottle priced at $10. The participants who drank the $90 bottle not only indicated an overall higher level of enjoyment (as to be expected), but they also had experienced more activity medial orbitofrontal cortex than those who drank the $10 bottle. The catch? They drank the exact same wine.

So what does this tell us about pricing our products? Well, for one thing, Apple's got it right. The price of their notebooks is significantly higher than it needs to be, and yet they don't have much trouble (a) selling them like hotcakes or (b) cultivating a dedicated (some might say fanatic?) userbase. In fact, it wasn't until the end of last year that they even contemplated releasing a notebook under $1000. So what's the story here? Great products justifying expensive prices? People paying for the "brand"? Or is there something actually physiological going on?

It's tough to say, but notions like these definitely make us think about our strategies. The webhosting industry is a complicated one--commodization is driving prices down and requiring hosts to underprice their services. Two years ago it was ludicrous to advertise a price under $6/month. Now that price is considered expensive. And yet does our catering to the competitive nature of the hosting market mean our product is any less valuable to consumers than it was two years ago? In fact, no--our product is constantly improving and evolving and a hosting plan now is "worth" more than ever. It would be great to price our plans to invoke the "Price-Placebo Effect," but unfortunately, the likely result would be potential customers hammering the "Back" button as soon as the images start to load on IPOWER.com.

So how do we tap into this pricing enigma? Have you tapped into it?

Have a Wonderful Fourth of July

We at IPOWERWEB would like to wish you and all your loved ones a happy and safe Fourth of July. As always we are available 24x7x365 by phone at 888-511-HOST(4678) OR via email at Support@IPOWERWEB.com.

Memorial Day 2008

Memorial Day is an American holiday in honor of every U.S. soldier that passed away during their military service for their country. Memorial Day is always celebrated on the last monday of May.
Due to the nature of Memorial Day, not every search engine has decided to create a special logo for Memorial Day.

The following is a note from Google on why the company decided not to have a special logo in honor of Memorial Day.

"We understand your interest in seeing a Memorial Day Google logo. If we were to commemorate this holiday, we'd want to express reverence; however, as Google's special logos tend to be lighthearted in nature, this would be a particularly challenging design.
We wouldn't want to create a graphic that could be interpreted as disrespectful in any way.
We have a long list of holidays that we'd like to celebrate in the future. We have to balance this rotating calendar with the need to maintain the consistency of the Google homepage...
Regards,
The Google Team"

Below is an image of Yahoo's logo in honor of Memorial Day.

Birthday of Walter Gropius

Walter Gropius is regarded as the father of modern architecture. He was born on May 18, 1883 and in honor of his birthday Google has redone their logo.

The Anniversary of the First Laser

When visiting Google today you will notice that its homepage logo looks a bit different.



Today marks the anniversary of the first laser. Theodore Maiman demonstrated the first working laser on May 16, 1960.

Have a Wonderful Mother's Day

Today is the second Sunday of May, which means it's Mother's Day. We at IPOWERWEB would like to wish you and your loved ones a wonderful Mother's Day.

In Need of a Mother's Day Gift?

Are you looking for the perfect Mother's Day gift but just can't find it?
Allow IPOWERWEB to help, our Pro Site web hosting Plan has never been priced so low. For a limited time you can purchase our award winning web hosting plan at only $4.95 per month.
An IPOWERWEB web hosting plan is the perfect gift for any mother - to learn more about our web hosting give us a call at 888-555-HOST.

Stamp Prices Rising

In February we told you that the prices of U.S. postage stamps will be rising on May 12th. We would like to provide you with more information on the new prices.

As of May 12, 2008 the prices will be:

First-Class Mail letter (1 oz.) $0.42
First-Class Mail letter (2 oz.) $0.59
Postcard $0.27
First-Class Mail large envelope (2 oz.) $1.00
Certified Mail $2.70
First-Class Mail International to Canada and Mexico (1 oz.) $0.72
First-Class Mail International to all other countries (1 oz.) $0.94

Cinco de Mayo

Today is Cinco de Mayo, marking the Mexican victory over French forces at the Battle of Puebla on this day in 1862. "Cinco de Mayo" is Spanish for May 5th. Below is a picture of Yahoo's logo in honor of Cinco de Mayo.

Nintendo Wii Not Dropping in Price

It's common to see the price of gaming systems drop after they have been on the market for a few years (or in some cases months). The price of the XBOX and the PS3 have lowered in recent months, while the price of the Nintendo Wii has remained the same. Nintendo is now saying that they have no plans to decrease the price of their popular gaming system. This means that if you are looking to purchase a Wii as part of your weight loss program and don't want to pay full price, you may have to wait a bit longer.

Happy Earth Day

Earth Day is celebrated by many people throughout the world. It is day intended to raise awareness about issues that affect the Earth as well as a day of appreciation for the Earth's environment. Some company's have changed their logo/homepage design in honor of Earth Day. Below are some images from around the web.

Election Time: Pennsylvania Democratic Primary

Not only is today Earth Day, it is also Pennsylvania's Democratic Primary. Registered Democrats in Pennsylvania will have the option to choose between Hillary Clinton or Barack Obama in order to represent the Democratic party in the upcoming presidential election. A total of 187 delegates are at stake and polls will be open from 7:00 a.m. to 8:00 p.m.

Tests To Improve Your In-flight Experience

Air France is currently running an in-flight experiment where passengers can not only send and receive messages but also make telephone calls. Passengers on the select AirFrance aircraft will be able to make calls at 30,000 feet. The voice aspect of the trial is believed to go on for about three months. So if you plan on flying with AirFrance you may be able to be a part of this trial.

AT&T Cutting Workforce

AT&T has announced that it will be cutting 1.5% of its workforce. The layoffs will cost the company $375 million in the first quarter. AT&T reports that one of the reasons for the layoffs is due to the poor economic situation in America.

Tax Day Is Here

Today is April 15th and that means its tax day. Here are some helpful tax day tips:

*Visit the IRS web site and file online - http://www.irs.gov/

*Call the IRS for information. Representatives will be available until 10 p.m. at 1-800-829-1040.

*Keep a copy of your completed tax forms.

*Find a post office that will stay open late - www.usps.com/tax

Tax Day Specials

Tax day can be a stressful day for many people. Companies like Dunkin' Donuts, Papa John's, Staples and Office Depot are trying to make it a little better.

Dunkin' Donuts will be giving away free donuts who purchase coffee. Papa Johns will be selling pizza for $10.40. Staples and Office Depot will photo copy your tax forms for free today.

Tomorrow is Tax Day

If you are yet to file your taxes, tomorrow is your last day (unless you are receiving an extension). The deadline for filing state and federal taxes is midnight tomorrow - so if you have procrastinated until now, you are running out of time.
You can always visit the IRS web site to receive more information about filing your taxes.

Crude Oil Prices Hit All-Time US High

Most people won't like to hear this, crude oil prices hit an all-time high in the US at $112. 21. At well over $100 per barrel the price of crude oil may lead to even greater bad news for the US.
U.S. gasoline prices don't seem to be declining, the following chart is the latest information presented by the Energy Information Administration.

Less Than a Week Until Tax Day

This year Tax Day will be on April 15, which means income taxes are due to the Federal Government of the United States in less than a week. Last year Tax Day was on April 17 but that is not the case this year. Make sure to have your taxes filed by next Tuesday.

Visit Your Local Starbucks Today

You local Starbucks has a surprise for you today - but in order to receive the surprise you must make it to you local Starbucks by Noon (Eastern) or 9am (Pacific).

Here is a link to the Starbucks Store Locator.