The Rule of Three. What does it mean and why does it work?
The number 3 in many cultures is considered a very strong number, almost magical. This concept has been around for hundreds of years and is even reflected in a Latin proverb “omne trinum est perfectum”, which means “every set of three is complete”.
The number 3 accompanies us in everyday life, and we may not even notice it. This iconic figure is used in science, religion, art, literature, politics, sports and even in most of the world-famous slogans of large companies.
So, why is it easier for us to perceive information in this format?
It has been scientifically proven that from an evolutionary point of view, we should have a choice to feel safe. But the abundance of choice is confusing, and also leads to discomfort. Three is the smallest number to identify the pattern. Patterns are much easier to remember and realize. That’s why it’s convincing and helps a person make a decision with a simple choice.
The Rule of Three for Business
The rule of three makes you think more deeply about your positioning and marketing plan. Reducing the scale of your products or services to three main ideas makes you think about your priorities, your basic and unique trading offers.
Providing customers with options in your offers in accordance with the good, better and best system has a positive impact on your business. So you give 3 things that can best meet both their needs and payment capabilities.
The rule of three is an effective way of structuring information, which facilitates its understanding and perception by customers. So, you can emphasize the individuality of your brand, tell about the advantages and hint at the disadvantages. Thus, you help the client to make the right decision for him, which will also be favorable for you.
Why is it effective?
You set up pricing plans based on the specifics of your product or service, as well as according to the needs of your customers. The ratio of the price and the functions provided are a strong lever of influence on the customer when choosing.
Using different price plans, you attract different customers. Regardless of whether you work with B2B or B2C, you will be able to make both small sales of your product or service and large ones.
This approach can help you penetrate competitive markets. The ratio of the proposed functionality and its cost allows you to find your target audience and bring your business to the top among competitors.
Three-Tiered Pricing Plans Model
A three-tiered pricing strategy – this is a business method of providing your customers with three different service solutions at three different prices. In this way, you show potential customers different levels of service with different pricing tiers in accordance with the volume of the product or service offered.
- Basic Package includes basic essential features. Affordable pricing for small teams, individuals, or new customers trying out the product.
- Standard Package – basic essentials + advanced features. This option is often highlighted as the “most popular” and brings in the most revenue.
- Premium Package – everything in standard + advanced capabilities. This is the highest priced option, which includes the most functionality. So, this package will bring you and your customer the best return on investment.
This model allows the customer to feel more confident in their choice, because they know which components and to what extent are included in the price. In this way, you inform the customer about the value of what they buy.
Often a business can predict the outcome. This is due to the fact that we are always looking for the most favorable cost-benefit ratio. So, the middle level is often called the “anchor price” or the “pillar price”, since the customer perceives this option as the best return on their investments.
Four Is the New Three
If you understand that your customers are growing and their needs are also growing with them, you can offer a fourth level in pricing strategy. This is a custom plan without an approved price or a list of services provided. This plan is offered to the largest customers on individual terms.
This option can benefit both your business and your client. However, when adding more tiers, it needs to be extremely clear what both sides gain from moving to a higher price.
We can help
It’s time to move from theory to practice and start setting up plans for your customers!
Rainex is a billing and subscription management platform. Using Rainex, you can set up any number of plans, in any currency and even in multiple currencies at the same time, and with fully customizable frequency.
Flexible rates settings are not all that will become available to you with the connection of Rainex: manage customer subscriptions, automate invoice generation, configure multilingual notifications, integrate with any payment gateways, and much more.
To learn more, sign up for a product demonstration. We will be happy to tell you about us and answer any questions.
