Publishing prices… and objections
Okay, so by whatever means they’ve used to determine what to charge, all producers have come up with a set of prices for their shows — their price grid. They’ve agonized over it, they’ve done their own market research, they finally come to a decision on what to charge the customer. This becomes their MSRP — the Manufacturer’s Suggested Retail Price.
They tell us what the MSRP is, of course; as a reseller, we have to know this.
The license prices are set by the producer; Loch Ness Productions doesn’t have much of a say in the actual dollar amounts in the grids (except for our own shows, of course). The producer gets the lion’s share of the money; as a distributor, we get to keep a small percentage of the sale price to pay for the work we do.
We think it’s our duty to provide the customer with as much enlightening information as we can, so they can make the best decision about what they’re shopping for. The better-informed they are, the happier everyone should be.
But incredibly, some producers have said they actually wanted us to hide the prices for their shows. Not only did they want us to follow the flawed-logic attendance- or seating-based pricing models, they wanted us to force customers to make phone calls to get price quotes.
Frankly, I felt this to be unfair, to both us and the customers. To me, it was like putting “Market Price” by the seafood special on the restaurant menu. It looked like we’re saying “if you have to ask, you probably can’t afford it!”
So we don’t deal with some producers. We prefer to do things differently.
When shopping, it’s to everyone’s benefit to know the MSRP. Even used-car dealers have a sticker price in the window. We think having the retail price known is not a liability. By publishing the MSRP, we inform the customer; we give them a starting point. This is apparently a fresh approach — making for more knowledgeable customers.
Customers have repeatedly told us how much they appreciate our “upfront” pricing, and how they’re frustrated dealing with other sources when pricing fulldome movies. It seems they have a hard time getting straight answers to their simple questions of “how much does the movie cost?”
One told me that he felt like he was being toyed with because one day he’d get a quote from someone that was different from what he was told when he talked to someone else from the same company the day before. Another told me he couldn’t get a straight line-item quote because the vendor insisted the show would only be made available as a “bundle” price with other shows.
One client thanked us for being so clear because, as he put it, “I felt like a jerk calling up [competitor X] and having to haggle and not get a straight answer.”
I really don’t like having customers feel like jerks, just because they want to know a movie’s price.
I think this makes our industry look bad, especially in the eyes of those new and unfamiliar with it — museum administrators deciding on purchasing shows for their new systems, for example. There’s already plenty of “sticker shock” (to continue the car dealer theme) to go around in the fulldome world. People are stunned when they see the license fee for one movie can cost a substantial portion of what they paid for their entire projector system.
Finance officers in purchasing departments often have no idea what they’re ordering when it comes to fulldome movies, and don’t really care; they just want to know the price to put on their purchase order. They’re not used to negotiating prices; they get annoyed when I try to explain their price can be different depending on an “annual attendance” report. They think they’re ordering widgets, and a widget should just have one price. And I think it should be that simple too.
Mostly, though, our customers don’t like the haggling and wheeling and dealing. We don’t like haggling either. They have told us there must be a better way, and we agree.
By linking our prices specifically to movie size, a metric no one can question, we firmly establish the concept that the published prices are indeed the prices. They’re not something to be negotiated based on a “squishy” metric like attendance or seating count or portability. The Post Office charges me the same price for stamps as the next guy; I wouldn’t like it if they didn’t! Stamp prices are posted on their wall; there’s no sense trying to dicker over them.
And our customers thank us for publishing prices. Even those who have not bought a hardware system yet have told us things like, “It’s great I can see the prices here for Loch Ness Productions shows. Do you know what [competitor X] charges for shows? My god, it’s unbelievable. Then I asked [competitor Y] how much their shows were, and I couldn’t get a straight answer.”
I think we’ve improved on this situation, and do a better job for the consumer.
Objections we’ve heard over publishing prices (and our responses)
It’s unfortunate we haven’t been able to convince all the producers whose shows we distribute that our methods are an improvement. Some of the objections I’ve heard over the years are quite incredible. I’ll share some examples, paraphrasing:
“If you publish my prices, I can never charge more than that myself. The customer will just buy the show from you, and I will only make my asking price. Some of my customers can afford to pay way more than the retail price, so I want to be able to charge them way more!”
In our experience, the bottom-line price is not the only factor in the decision-making process. Customers often are willing to pay more than the MSRP if they feel they will get something of value for doing so. Additional services provided, timely delivery, convenience, multiple forms of payment accepted, previous dealings with the vendor — all these factor into the purchasing equation as well.
Consider our Geodesium albums. We’ve sold tens of thousands of them over the years. Currently our MSRP for CDs is set at $13. That’s what we sell them for on our Web site (we are the manufacturer, after all).
Amazon.com buys Geodesium albums from us wholesale; they often mark up their selling price way over our MSRP. And even at this higher retail price, they sell more of our CDs than we do ourselves! They place an inventory reorder practically every week.
This is proof positive that one can charge way more than the manufacturer’s suggested — and published — retail price and still make plenty of sales!
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“We do not want to make our price list public, since in the end the final price we charge each client is different, and it hardly ever matches the price list anyway.”
You know, that could account for why customers feel they’re getting jacked around when trying to price shows — because evidently they are if someone charges each customer a different price.
As distributors, we at Loch Ness Productions don’t have the luxury of having such a flexible approach to pricing. We have to pay the producer the same amount on their price grid for every sale, every time. Since the price we pay the producer is constant, the customer should expect their price will be constant too. And with a published price list, there really can be no question about it.
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“License fee grids from most producers (whatever the criteria or logic used) are created for internal use as a tool in the selling process, not presented in full to any one customer. I don’t know of anyone else who posts their pricing online. In the course of a licensing conversation with an interested theater customer, they should never know the ‘complexity’. The salesperson provides one license fee amount, based on the information he/she gleans about the theater.”
Yes, we have heard that’s how some others operate. We’ve run into used-car salesmen who do things exactly that way, hiding their final price until they’ve sized up what they think we can afford to pay. And we do not want to do business that way.
We are deliberately trying to do things differently from what “the competition” does, to set ourselves apart from their modus operandi.
Our customers have told us they hate having to call for prices or get quotes. They can’t tell if they’re getting a fair price, or whether it will be different the next time they call. They do not like being kept in the dark. Rightfully so.
Every product, no matter what it is, has an MSRP, and that information can usually be obtained somewhere. We say the better educated a customer is, the better off they will be.
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“The customer only needs to know one price, the price for their theater, not all prices on the list.”
While it might seem to an unaware producer that a customer should only know a single price, this is a short-sighted view.
Some customers are buying a fulldome system for the first time, and are pricing various models of projectors. If they get <model X> with a high resolution, they need to know how much more movies may cost than if they go with <model Y> with a lower resolution. They need to be able to compare and contrast the various tiers.
Almost all customers will be looking to upgrade to bigger and better systems in the future. They need to plan and budget accordingly. They need to know how much movies will cost for those systems too (and how much it will cost to upgrade the movies they already have!)
We get calls from people budgeting their five-year capital expenditures, trying to forecast their future needs. They ask what happens if their attendance goes up or down. They need to know how much movies will cost for other attendance levels too.
So people do need to know the pricing for the other tiers, not only the one they qualify for today. We think the more information a customer has ahead of time, the better.
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“When you publish all prices, you scare customers away before they even give a closer look at the product, or before they have a chance to talk to a sales rep.”
Actually, by publishing prices we are eliminating the scariness factor. We are removing the need for the customer to have to deal with that sales rep with their hidden prices. We don’t have “sales reps” like that here on our staff.
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“When you publish all prices, the customer can get confused, and get wrong ideas of their place in the price list, and think they have to pay a wrong price.”
One of the things people say over and over to us is, “We are SO glad you simplified the pricing; thank you for publishing prices.” They come to us because they get straight answers.
Our T-shirt size pricing model is about as simple as it can be. There is little room for confusion when all we ask is, “What size movie do you want?” and there’s only one right answer.
Confusion usually comes in when we instead are required to use complicated size- or attendance-based pricing schemes, with six or seven varying levels of ultimately irrelevant numbers.
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“My competition will learn my prices. Competitors with competing products can use the published price list to their advantage.”
Producers have no competition when it comes to their own shows; they are the only ones who can create them. The costs to create that show, or any show, are going to be unique to the production and producer and controlled by them. They are not affected in the least by the publishing or hiding of somebody else’s retail prices for some other show.
All shows are vying for the customer’s money, and if the customer has only the funding to buy one show, somebody wins and somebody doesn’t. But that has no bearing on whether or not the prices are published. Actually, many customers prefer to buy shows with known prices, because they can plan ahead and budget more easily.
Now if by “competitors” you mean other distributors offering the same show, there’s still no advantage to be gained from us publishing the retail prices. We are all working from the same price grids, with the prices set by the producer. It’s a level playing field (or should be, anyway).
Page 1 – Overview
Page 2 – Who produces fulldome movies
Page 3 – What to charge, and squishy pricing models
Page 4 – Our firm T-shirt size pricing model
Page 5 – Publishing prices and objections
Page 6 – Varying license terms
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