When launching any new product, pricing is an important component to consider. We must price the product to fit in with our overall value proposition. Are we positioning the product as a high end expensive, valuable product or a bare bones low cost product? What do our customers want? How much will they pay?
What if we price incorrectly? Well, there are two ways to handle this one. One is to simply raise prices. Another way is to reduce services. But, how do we know if we reduce services or features below what our customers expect.
The way that one no frills airline, Spirit Air, chose to raise prices, was to institute a fee for carry on bags. Customers expect to be able to carry on a bag, but on Spirit, if it won’t fit under your seat (where your legs go in these tiny cramped spaces) you will pay $45 more. How do they collect that? Does it delay the flight from leaving on time? What does your customer expect? Maybe it’s just easier to fly on a competing airline.
On this airline, you can probably expect that in the near future, there might be charges for wearing clothing on the plane or to breathe the complimentary air on board. Want peanuts or pretzels? That will be an extra charge, you with the eye glasses – extra charge. Maybe they should just charge us by the pound – including all carry on luggage. At least that has some rational basis.
Looking in from the outside, sometimes a price increase is more palatable to the customer than losing a feature or a service that is expected.
(The good news for travelers? At least five airlines have said they will not follow suit.)