Sunday, December 19, 2010

Yankee: "Operators need to develop the right price/package mix"

A new research by Gordon Mack, Research Associate, Yankee Group focus on the recent tiered services trend: "Operators around the globe are embracing tiered pricing plans for data device and smartphone users. The plans show a wide range of price points and market strategies, but are not without pitfalls. Poorly constructed plans can easily cost operators revenue."

See "Global Adoption of Tiered Data Highlights Pros and Cons" - here.

" ..tiered pricing presents operators with a dilemma. While tiered plans can both help operators gain subscribers and increase revenue, they also have several pitfalls that if not avoided can thwart both objectives. For example, if plans aren’t designed and marketed properly, bill shock and overage fees may end up leading to churn and hurting operator bottom lines. Operators adopting tiered pricing need to develop the right price/package mix to fit both their network and strategic goals. Those that avoid competing solely on price and get creative in building their tiers will see the most success".

Note that in most cases, the tiers in tiered services are volume-based only (here). However, a more advanced approach would be to add additional value to the tiers, such as guaranteed QoS - mainly for video or VoIP services. See the suggestion of Allot and Openet (here), TeliaSonera's Value-based Pricing (here), ideas from Everything Everywhere (here) or even the complex plan offered by Plusnet, a UK-based Broadband provider (here - see chart below - how the different service plans are mapped to traffic priorities)

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