Research Recap

When Can Offering Premium Services Hurt—Not Help—Expansion?

Key Takeway

The Pareto rule (20% of customers account for 80% of revenue) tempts companies to focus on premium services. However, perceiving these offerings as zero-sum and thus unfair can diminish the appeal of basic offerings for non-premium customers. Companies can mitigate backlash by promoting premium offerings that subsidize services for all.

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