Pricing, Positioning, and the Bifurcation Effect: Mastering Market Dynamics
Gone are the days of careful feature comparisons and middle-ground choices. Welcome to the era of the Bifurcation Effect.
In the pre-software world of scarcity, consumer decisions followed a multi-factor process. The result was a normal distribution curve.
But in today’s abundance-driven market, we’re witnessing a dramatic shift — the Bifurcation Effect.
Here’s how Enzo Avigo (june.so) and I explain it:
1. Polarizing Preferences
Imagine a Taylor Swift concert. In a scarce market, you’d see a bell curve of interest. But in our abundant world, preferences gravitate to extremes:
• Die-hard fans: “I’ll pay anything!”
• Indifferent consumers: “Netflix and chill, thanks.”
The middle ground? It’s vanishing. As a result, Taylor Swift tickets are incredibly expensive.
2. Software as The Ultimate Abundance
Software takes this bifurcation to the extreme. We’re talking:
- The “Holy Grail” product
- The “It’ll do” budget option
Why? Because in a world of endless choices, we’re hardwired to simplify. We don’t have time for spreadsheet comparisons anymore. We go to either extreme.
Skeptical? Look around. How many times have you chosen a product purely based on its reputation or price point, without diving into the nitty-gritty?
If you’re finding this interesting, explore the deep-dive to learn in depth.
3. Position Yourself in a Bifurcated World
For founders and PMs, this means the game has changed. It’s no longer about moving people through awareness funnels.
Your mission? Create an irresistible gravitational pull. You’re not just building software; you’re crafting desire.
Think about it: Today’s software products look more like consumer brands than traditional tech companies. It’s not about features; it’s about identity.
4. Pricing is Part of Your Positioning
In this light, pricing isn’t just about premium vs. budget anymore. It’s a strategic tool that defines your company’s identity and market position.
Consider Basecamp’s rejection of per-seat pricing, positioning them as champions of simplicity and transparency. Or open-source companies like Sentry and Cal, whose on-premise options showcase their commitment to community and user control.
Your pricing is a tool for your positioning. Once you understand that, answering tactical questions is much easier.
The Takeaways
- Position boldly or get lost in the noise
- Align everything — product, marketing, pricing — to claim valuable mental real estate
- Remember: In this bifurcated world, you’re either the best or the cheapest. There’s no comfortable middle anymore.
Still not convinced? Look at the giants — Apple, Tesla, Notion. They’re not just selling products; they’re selling identities and aspirations.
The Bifurcation Effect isn’t just a theory. It’s the new reality of the software world. Ignore it at your own peril.
