Using Price to Nudge Consumers

The Canadian Press recently reported that Canadian telecom giant Rogers Communications will begin charging customers an incremental $3 per month for using the company's older 3G networks.

Charging MORE for the privilege of using outdated technology?

It's not greedy, it's strategic.

In fairness to Rogers, the article also notes, "Rogers said customers can avoid the charge by switching to a 4G or 5G device, with free options available, if their current phone doesn't support those upgraded networks."

So this upcharge is likely less about getting an extra $36 per year from existing 3G customers...

... and more about nudging them to finally upgrade their phones.

Why is that strategic?

Upgraded phones offer more features that use more data, providing more reasons to upgrade to more expensive data packages.

Which is likely worth far more than $36 per year.

Remember when Netflix and The Walt Disney Company SIGNIFICANTLY increased the prices of their ad-free streaming services while simultaneously promoting the benefits of their much-less-expensive ad-supported tiers?

None other than Bob Iger himself admitted publicly that the price increase was a nudge to move subscribers to the Disney+ ad tier, which is more profitable for the company.

That's because when you subscribe to an ad-supported tier, streamers get paid twice: once from your monthly subscription fees and once from advertisers who feature their ads on the platforms.

Streamers WANT you watching ads, and high prices on the ad-free tiers are one way to nudge you towards that decision.

Price increases aren't always about generating more revenue.

Using price to nudge consumers into making decisions you want them to make can be a strategic move that can work very well.

Just ask Rogers. Or Netflix. Or Disney...