I was on my way to Friday’s Likemind.  Standing next to me on the train was a guy reading his Kindle, so I asked him how it was working out.  "Kind of a clunky interface," he said.  "But I’ve gotten used to it and now I’m addicted."

Then he goes onto tell me this: "I read the Times and the Wall Street Journal every day.  I used to pay $90 a month for both.  With this, I pay $25 buck a month and both papers are there downloaded to the device before I walk out the door every morning.  I’m saving $65 buck a month now."

So what’s happening here?  We’ve known for a long time that the costs associated with digital are significantly lower, since there’s really nothing physical involved and storage costs are minimal.

But the other thing that marketers need to keep in mind is that digital lowers the price threshold of consumers.  We’re at point now when, in many cases, digital is at least just as good as having a physical version.  More importantly, consumers are now used to paying less for that item.

Music is a great example.  Like, aren’t you annoyed when you see some indie artists still trying to get you to buy their CD for $15?  In some ways, they’re pricing themselves out of the market, because consumers are getting more accustomed to only paying $9.99.  I know I am.  Now, anything over $10, and the consumer has to really stop and think about making that purchase.  I think digital has the potential to push certain products, services, etc. into the zone of impulse purchases. 

Unfortunately, there are no impulse purchases when you make consumers evaluate the price-to-value ratio.

Posted by Rob Fields