In pricing and billing, the complexity curve never went away

pricing complexity
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You will be familiar with the complexity curve. There are several versions of it, but in pricing – and specifically telecoms pricing – it is about confusion and differentiation.

The problem with telecoms pricing used to be that the only thing you could compete on was price (and possibly quality). When the quality part of the equation had been blown out of the water because quality was actually about perception (to wit, MVNO Virgin Mobile in the UK was voted the best-quality network, but ran on T-Mobile’s network which was voted the worst), it came back to pricing.

So, Company A would launch a new service – cheap international calls to several countries, say. Then Company B would launch a similar service, with a twist, some extra free minutes and a cuddly toy. Company A would respond with an extra country (people who called this country also called that one), free texts on alternate Wednesday afternoons and a free cocktail if could identify the ingredients – you get the idea. A relatively simple service would become increasingly opaque until customers became so confused they gave up and stayed where they were (by this time, in the foetal position in the cupboard under the stairs).

When things got this confusing, and even mathematical geniuses had joined the group of confused customers under the stairs, Company C would up and launch a service that was so simple that the huddle under the stairs would come out, blink in the clear light of a new dawn and sign up to the new service.

Almost immediately Companies A and B would ponder a while and start the whole confusion/differentiation/add a bit, lose a bit equation all over again, and soon everyone would head back to the cupboard under the stairs.

That was the complexity curve, as applied to good, old fashioned telecoms.

There was a moment – a year or two even – when we thought differentiation in telecoms pricing would grow up somehow. The subscription economy, we thought, must be a simpler, safer world, surely.

Not so much.

It started that way, as these things do – yet while everyone is becoming increasingly convinced that subscriptions are the way forward, they are becoming anything but simple.

When the subscription economy was being touted as the future, some vendors tutted and said, “Yes, but subscription billing will not simply be about recurring charges. There will be one-off payments, impulse purchases, in-app payments, all sorts. And by the way, what you need is a vendor who has experience of complex (confusing) telecoms pricing and billing, otherwise you will get locked into a path that will not flex when you need to flex your prices.”

And they were right.

While it started with simple subscriptions, it is fast becoming much more about complex bundles, offers, services and personalised pricing plans. Personalization can only mean that you could, potentially, end up with as many pricing bundles as customers (Tesco’s Clubcard program already ‘personalizes’ rewards down to segments of six customers, out of millions). And, of course, privacy, data protection and endless other regulations will confuse matters further.

Once again, it seems, it is about managing confusion effectively.

As Tom Dibble, president and CEO of Aria Systems says (not necessarily of telecoms),“These trends indicate that, for enterprise companies to remain relevant and meet the new demands of digital-age consumers, they need to update their backend operations and embrace billing as a strategic differentiator for their recurring revenue business models.”

That, too, never seems to change.

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