What I Learned From Blockbuster’s Pricing Model

When I checkout my latest Blockbuster videos they told me that my local store would be closing/moving.  Either way, there wasn’t going to be a local store for me to visit any longer.

I wasn’t too upset.  After all, I would just choose another video store.  At least that’s what I thought.

When I went to the new video store, I was completely overwhelmed with the number of options and prices that they had going on.   When the woman started going over all of them (they weren’t written down — she just had to know them) – my eyes literally glazed over out of confusion.  Good thing she gave me this HUGE sheet of coupons with some of them outlined:

“We have a $1 favorites section filled with moves you’ll love.  We guarantee it or your next one is FREE”

“You can build your own family video bundle!  Add 2 select snack items for just $3 with any 2 paid rentals”

“With every new release rental Tuesday, Wednesday and Thursday, you get a $1 rental FREE”

“When you rent any 3 five-Nite new releases you get 1 FREE – look for the purple and yellow stickers”

“As a new member you get half-price rentals for your first 30 days”

This is just a sample.  I haven’t listed them all – at least I don’t think I have.  Honestly, my head spins just thinking about all the options.

You see, I had gotten spoiled by Blockbuster.  I had joined this video “swap” program.  I paid one monthly fee (don’t ask me what it was, I don’t remember) I only know that I would pay a flat fee for the privilege of walking in there, choosing any 2 new releases and swapping out the 2 I had with me.  I was in and out in as long as it took me to choose.

There were due dates and no late fees.  The monthly fee was its own incentive to swap your videos frequently.  Because the more frequently you swapped them out – the cheaper they got at the end of the month.  But if you suddenly got busy and didn’t watch them when you thought you would — no biggie.  You just returned them when you were ready and got 2 more.

I hadn’t even realized the habit that had set it.  Not to mention the fact that I no longer remembered what the monthly fee was.  They had my money every month — guaranteed.

What I Learned When the Blockbuster Moved

1. Subscription pricing tied to a product yields a habit that’s hard to break. In my Blockbuster experience after the initial value had been justified in paying the monthly fee – I was done thinking about it.  My focus shifted to the repeat behavior of swapping videos.  In what ways can you take the focus off the price and put it on having customers repeat behavior?
2. Too many pricing options make customers angry.  I’m already mad at having to pay a renewal fee for not having time to watch my video – and keeping it an extra day.  Too many choices – I will have to think about which sticker the video has, can I keep it for 5 days, is it worth 50 cents more?  Too many pricing options confuse and piss customers off.
3. Going to a video store for me – is like going to a book store. Visiting a video store is a completely different, more tactile experience than ordering something online.  When Blockbuster simplified their pricing – I felt free to focus on what I wanted to see.   If your business is being effected negatively by online orders – re-think the purchasing experience at the store.  In what ways can you make it an experience and not a transaction?

I’m curious about what you think?  In what ways has a product’s or services pricing effected how you feel about the brand?