Why Companies Are Setting Prices Wrong, and How to Do It Right

Each month, I shell out $6.99 for word processing software, $9.99 for a transcription app and $7.99 for a note-taking organizer. I’m what you might call a power user, often logged in to all of them for more than 40 hours a week. But my total cost is less than $1 a day—the same price occasional users pay.

This kind of pricing drives experts bananas. “A subscription, in a nutshell, is a quantity discount,” says Oded Koenigsberg, professor of marketing at the London Business School, who says he sees this and other pricing “inefficiencies” everywhere he shops.