It's Not Easy Being Cheap

Many ISP owners seem to think that marketing is simply about establishing a lower price point than the competition, but members of the ISP-Marketing list say that if you've got the lowest price, customers will think you're cheap.

[September 9, 2002]

On the ISP-Marketing list in August, DW inquired,

"We've spent $14,000 this month (radio and billboard ads) to market our $9 a month dialup service, and after three weeks we've gotten very few responses. Do we just need to be patient, or should we be doing something different?"

A number of respondents had an unusual suggestion—raising rates:

[GC offered] "I believe your results are low because the public is afraid of bargain low-cost ISPs: the public has a perception that below $19 a month, the ISP will fold. Raise your prices."

[MH agreed] "We have found that going below $16.95 a month has resulted in low numbers of new subscribers. You might think that everyone will jump on board because it's cheaper, but a few years back free ISPs and discount ISPs were popping up left and right and did swipe a lot of users from $19.95 ISPsraisingthen they realized that the mass numbers were not giving them the profitability they were banking on, so they lost their shirts."

"Now subscribers are suspicious about switching to a lower-priced ISP: they've been there, they've done that, and they've been burned before. People expect to pay between $16.95 (AT&T) and $23.90 (AOL) for quality service."

DP, on the other hand, contended that low-priced service can be successful in the right market:

"I don't think low cost is always a bad thing. We start at $15 a month, and knock a couple bucks off per month if they pay for the year in full. We also do a money-back guarantee: if they don't like it, they can get their money back within the first month. I think it really depends on where you are, what your competition is like, and what other options have been available in the past."

Others suggested that the real challenge is to sell your service based on more than just price:

[JG advised] "If people aren't calling, it's because the ad message isn't compelling. If the sole focus of your advertising is a low price, you are unlikely to get people to switch just to save eight to ten dollars a month. However, if the focus of your ad message is the basic traits that truly differentiate your service from the competition, and those traits have meaning in your marketplace, getting consumers to respond shouldn't be difficult."

[TC agreed] "It sounds your message is price and price alone. Are you providing any unique services? Are you participating in any revenue share programs which allow you to offer other products? Why would a subscriber come to you? Longevity is the key here. Stick with it, and don't give up the message. They will come."

[MH added] "You're just not going to get them on price: you have to have a niche market, a name, a tie-in to the community, something other than, 'Hey, we're the cheapest.'"

—End