Several months ago the Wall Street Journal and I were having what amounted to be a discussion on the elasticity of demand based on pricing. They billed my credit card for a full priced renewal and I called and cancelled. They then called me about once a month and tried to get me to renew with offers that included only a very small discount. I continued to decline and told them I had been subscribing in the past at a certain price and I was absolutely unwilling to pay more. I admit I almost changed my mind and relented several times in the 3 months I was paper free, but like everyone else in today’s economy I have less disposable income than I did before and I found it hard to justify exceeding my desired budget for subscriptions.
Finally they called, made me an offer I couldn’t refuse and I once again became a reader. Today they sent me an offer targeted at regaining some of the money I refused to pay them. It seems that for a dollar a week I can get the WSJ formatted for my blackberry. Now this is smart. I live with my crackberry glued to my body and it would solve the problem of no newspaper in hotels. Two years ago they would have had my subscription about as fast as I could have pressed the button but not today. Today, I carefully went to the web looking for reviews, found a free download and am now testing it out to see how much of the paid content I’m really going to look at. Don’t get me wrong there’s about an 80% probability I will subscribe in order to get their introductory half off price but there is still some doubt.
Additionally even if I do subscribe it’s clear we’ll have another discussion next year when they send me a bill for 2.5 times what I’m willing to pay and we once again start the annual game of how badly I want their product verses how badly they want my money. Additionally there is a possibility that their new product (WSJ on the blackberry) might canabalize their other products. If they hold firm on pricing I might decide to drop 2 out of the three things I’m subscribing to, because my purchasing behavior now has become very inelastic (No more 5% a year and I won’t notice).
An even better indication of this return to frugality was my recent decision to brush up my high school French. As I’m sure everyone’s seen Rosetta Stone is available everywhere you turn (it’s not cheap but it is ubiquitous). There was a time when I just would have spent the money. Not now. I went to the library and checked out some old language tapes. Turned out I never used them. I read the French Phrases for Dummies that had also I checked out from the library. So instead of spending $400 for something I would only feel guilty about not using I will buy the Dummies book (about $5 used) and I will considering investing in a French-english dictionary for my blackberry when I go to symposium next year (about $20). That’s a 93% savings (which given the exchange rate on the Euro might buy me dinner and an extra night in a hotel in Paris)
There is a point to this story. Consumer behavior is fundamentally changing. Value for the money is going to be important in a way it hasn’t been for years. The sooner companies start modeling this new behavior and contemplating what it might mean to their products and their bottom line — the sooner they’ll get the right projects in the pipeline. In the mean time those of us who oversee project portfolios should be prepared for some rapid changes in what we otherwised believed were well laid plans.
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