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Which is better ?


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High supply and demand means more competition. It's better if you're better than the competition, since you'll end up with more clients. If you're not good, you may well get zero clients, even if there's a lot of demand, since there's tons of options from the client side.

Low supply and low demand means lower competition. If you're the only one offering a certain service, you'll still get clients no matter how good or bad you are, since they don't have any alternatives. However, if the demand is low enough, even getting all of it may not be enough. 

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Good explanation.

I would take that description to mean it's a question of "red ocean" versus "blue ocean". (https://en.wikipedia.org/wiki/Blue_Ocean_Strategy)

A red ocean (high supply/demand) has a lot of people under-cutting each other as they compete for clients. A blue ocean (low supply/demand), with it's lack of competition, has more room for the seller to set the price. So, while they may get fewer clients, they get more per client, and can outperform the average seller in a red ocean in total value terms.

There's a lot of ways for one to create their own blue ocean. I also recommend checking out the concepts of "Unique Selling Propositions" (Rosser Reeves) and "Positioning" (Al Ries/Jack Trout).

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That's a great insight, actually, the red/blue ocean idea. It's important to still remember that price elasticity has its limits though, demand is also demand for a certain price. Just because you're the only one offering X does not mean X can be priced infinitely high, unless X is a life essential at a certain point people will just choose to go without it instead.

Edited by visualstudios
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Hmmm. Price tolerance. I have no idea how to predict price tolerance or any formal methods for predicting it.

One thing that might be transferable is a trick from game balancing. When trying to figure out the "good" value for something, the shortest path to finding the right number (when using trial an error) is to double and halve. Maybe there's an A/B Testing type method Fiverr could look into creating and offering. Like, say your Basic tier is always your Basic tier, but you could set it to test different prices and offering on Standard and Premium to see if certain things attract better value.

The classic example is having magazines split run coupon ads where one group gets something saying "Improve your golf swing in under ten minute a day" and others get "Improve your golf swing for under $200" and see if people care more about the price or the time, and you deploy the winning Ad on a larger run.

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