What is versioning?
A corporation engages in versioning (or “quality discrimination”) when it manufactures and sells distinct variants of fundamentally the same product at varying price points. By versioning a product, the customer can acquire either a more expensive or less expensive model, depending on its value—the company endeavors to command premium prices based on the perceived value to the consumer.
Versioning Explained
Typically, versioning is implemented when a product’s production expenses are substantial and lack variability. For instance, in the context of software products, features are either included or excluded to differentiate versions and price points; in essence, offering a variety of choices caters to customers’ varying needs and desires. The basis for this concept is the customer’s propensity to pay. A greater propensity to pay will lead to the acquisition of a product of superior quality. In contrast, a diminished propensity to spend will result in purchasing a product of inferior quality.
The practice of versioning is prevalent across numerous industries. Within the consumer technology industry, it is not uncommon to encounter the introduction of multiple iterations of tablets and smartphones, each equipped with an assortment of options and data storage capacities. As an illustration, an enhanced smartphone iteration might incorporate control functionalities not present on the other phones within the same product series and a screen resolution optimized for video playback.
Frequently, it is the case that versions consist of a high-end or luxury model featuring superior ornamentation and the most expensive price point, in addition to a low-cost or budget model with only fundamental functionality and no extras.
Software suites often incorporate versioning options, which grant clients the ability to select which features they wish to access for a fee. As an illustration, Microsoft offers its Office Suite of applications in distinct iterations catering to residential users, individuals, and students. Additionally, the company provides business users with tiers of the software suite, each comprising unique software titles and services contingent upon the version acquired.
Subscription television providers, encompassing cable and satellite options, may also present consumers with varying pricing structures for their services packaged in distinct versions. The price escalates with the addition of channels, with premium channels frequently being exclusive to more expensive package offerings.
Likewise, the automotive sector implements versioning for its products. Optimal equipment can be added to the basic model of virtually any automobile, including premium stereo systems, connectivity to the internet and data services, and integrated roadside assistance. Engine options for the vehicle could enable the production of speedier variants. Furthermore, passenger capacity can be increased or decreased across models based on the seating configuration.
Conclusion
- Versioning encompasses the manufacturing process of producing distinct iterations of a single product, offering each at a unique price tier.
- When the costs to modify a product at various levels are low and fixed costs are high, then different models or versions of the product are most compatible.
- In addition to the automotive industry, software suites, subscription services, and culinary products frequently utilize versioning.
