10.3 Versioning

Versioning is sometimes confused with price discrimination, but they are distinct practices.  In versioning, the marketer changes not only the price, but also the item itself.

Suppose Lobster Land offered all-day passes to adult guests for $49.99.  For this price, an adult visitor could come at any time after the park opens at 9 a.m. and stay until the park closes at 9 p.m.  He or she could go on an unlimited number of rides, and could also freely roam the other park attractions, including the occasional visiting musical act, comedy show, or other performances.  

Now imagine that Lobster Land decides to present an alternative limited day pass — one that enables visitors to enjoy unlimited access, but only after 4 p.m. — and the park charges $29.99.  Even though this second ticket might appeal to a different, more cost-conscious consumer segment, this is versioning, not price discrimination.  The all-day pass and the late-day pass are not the same thing.   

Versioning can often be seen in the world of technology.  By offering five different versions of TurboTax, Intuit can appeal to various user segments differently.  People with basic, uncomplicated tax returns can use the standard version of the software, and others, who own businesses or complicated investments, can pay extra for more powerful versions of this tax software.  

Users of popular Android and iOS apps are likely to be familiar with the freemium strategy employed by many app makers.  A firm employing a freemium strategy gives some version of its product or service to users at no cost.  Users who want full access to all the features, however, will incur some kind of out-of-pocket cost.