Unlocking the Genius of ChatGPT Pricing

Hey there, savvy marketers!

Are you ready for another thrilling adventure in the world of pricing strategies?

Today, we’re taking a deep dive into the fascinating contrast between Apple’s notorious “Price Skimming” and OpenAI’s intriguing “Feature Dripping.

Apple’s Price Skimming: A High-Price Joyride

When Apple launched the iPhone 13, the price tag read a whopping $799.

But fast-forward to the iPhone 14 launch, and suddenly that iPhone 13 seems like a steal at $699. Oh, and let’s not forget the iPhone 13 Mini — even more budget-friendly!

You see, Apple’s clever price points typically drop around 16.70% in the first year. And 22.53% in the second. Then 33.63% in the third.

This strategy, my friends, is called Price Skimming.

It’s a marketing masterclass where companies set sky-high initial prices for new products and then gradually lower them over time. By doing so, Apple rakes in massive profits from early adopters and then reels in price-conscious consumers as the price drops.

It’s a win-win for everyone (except perhaps your wallet).

ChatGPT’s Feature Dripping: A Different Kind of Marketing Marvel

Now let’s pivot to ChatGPT, which took a completely different approach.

While both Apple and ChatGPT boast high-demand products, their pricing strategies are as different as apples and… well, OpenAI.

Instead of skimming the top off the market, OpenAI chose to embrace “Feature Dripping.”

When ChatGPT first launched, it was completely free to use. This brilliant move accomplished two things:

1. ChatGPT gained traction, with an estimated 616 million visits per month and 1 million users in just five days.
2. By offering a free service, ChatGPT collected a treasure trove of user behavior data, invaluable for improving the model.

But then, ChatGPT made its first move towards monetization by introducing a paid option without alienating its existing user base.

Just like that, within months of launch, the service started to generate revenue. Enter the era of “Feature Dripping.”

The Art of Feature Dripping

The paid features were meticulously curated to offer real value to users. For a modest fee, users could access a range of enticing benefits, like faster response times and priority access.

This move raised eyebrows but ultimately made sense — after all, running such a model is no small expense for OpenAI.

And then, the game-changing GPT-4 arrived, convincing even the most skeptical fence-sitters to become paid members.

My very own survey revealed that 54% of respondents became paid members after GPT-4’s launch.

While other companies also use additional features to justify higher price points, ChatGPT’s approach generates interest without upping the price — just adding more value for the consumer.

Final Thoughts: The Genius of ChatGPT’s Pricing Strategy

In the wild world of marketing, ChatGPT’s pricing strategy is a stroke of genius that demonstrates the power of feature dripping in building a successful business.

By offering a free service to gain traction and creating a healthy funnel for monetization, ChatGPT has managed to find the sweet spot that keeps users engaged and revenue flowing.

So, fellow marketers and side hustlers, take note of this innovative approach and remember: you don’t always have to skim the top to make a splash.

Sometimes, it’s all about dripping your way to success.