Shell Price - The Rise Of The Minimum Viable Product

It's not working properly? Yeah, that's a selling feature!

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Have you ever been to a restaurant that has an "All You Can Eat" setup or something similar to it? It might have been something like a buffet, or unlimited breadsticks, or something where you could just keep going and getting food until you couldn't possibly cram any more down. For the most part, these places are great, and the promise of the food convoy is enough to keep you coming back again and again. Taste and food preference aside, it just feels like you got the most out of that meal.

It's because you did.

These places typically come with similar structures to their business model. Come in, eat as much as you want, and pay us as you stumble out the door to your awaiting food coma and restless night with the meat sweats (yes, I'm speaking from some experience here). You pay not for what you ate, but the cost of entry. You know you will leave that building having paid to make yourself full. It's quite literally the best value possible short of them sending you with a couple days worth of leftovers.

What would the opposite look like? You can imagine going to a restaurant and paying for a very small portion of underwhelming food that will definitely leave you scrambling through the pantry within the hour. You typically don't get a lot of people interested in that as a business. It seems like an idea doomed to fail, especially put into that context.

So why has the tech industry based so much of it's ongoing business on this exact model?

At a glance, we see products and services sold to us at the "Standard" markup fee and shrug because... well... that's the cost of technology. However, as technology gets increasingly powerful, it paradoxically seems that it's not making giant leaps like it once did. This is by design, and it's the result of the erosion of tech industry product value. What we are now seeing is the sale of Minimum Viable Products (or close to them) for what we call "The Shell Price". These Minimum Viable Products represent that restaurant that has trimmed portions and degraded quality, and they stand to continue growing in popularity and severity if left unchecked.

So what is a Minimum Viable Product and a Shell Price? What effect do they have on you the consumer? How do they benefit businesses who choose to employ them? And how can we push back against the decline in value?

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The wrong kind of MVP

You can be forgiven for not having a clue what either a Minimum Viable Product or a Shell Price are. They're not very common terms quite simply because they are really, really, really bad for marketing. The only time you see them come up is if you go looking for it or you stumble upon it, but you quickly realize that they are the names for some pretty common situations.

A Minimum Viable Product is basically a product or service that provides just enough value (the bare minimum) to be functional, and is typically a designation reserved for products that are in the "Proof of Concept" stage of development. This is fine. Every product needs to start somewhere. What's not fine is that these Minimum Viable Products are being sold. For money. As if they are a finished and complete product.

This is very much a trend pioneered by the tech industry. If you've ever heard of a product or service being "In Beta" or "Pre-Alpha" or "Early Access", then you've likely seen a Minimum Viable Product. Again, not a bad thing. What is a bad thing is that these incomplete products are being sold to people under the promise that things can be improved. We live in an "Always Online" society, so updates can be made when they're ready. Unfortunately, there's no promise these updates will come anytime soon (or... ever...). Missing features or major bugs are a staple of these products and further degrade their value. Ultimately it's the person selling the product or service declaring it's a finished product, but that doesn't mean the product has anything beyond that absolute bare minimum on offer. I can sell you two plastic bags and tell you they're shoes, but it doesn't mean they do anything besides go on your feet.

A Shell Price is the price to get you access to the most basic features of a product or service. It's the entry fee. It gets you in the door. If you've ever seen a subscription based service with multiple tiers, you'll know what I'm talking about here. There's typically some basic package that comes with "Access" and like three tiers after it with increasing amounts of stuff thrown in. That basic "Access" package is going to be cheapest for obvious reasons, but that's the Shell Price.

For some people, that Shell Price is all they need. It's a good trial option to see if they like what's on offer. Often times though, the Shell Price is there to simply get as much money from people for as little as possible. It makes forking over extra money for the upgrades more appealing. This is especially true when we marry it together with the Minimum Viable Products we just talked about.

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Shelling out and selling out

At the end of the day it is you, the consumer, that has the money that every company wants a piece of. That being said, let's do a little thought experiment. Pretend you are a company (and remember, companies only exist to make money). Would you rather make...

a) A little money

b) Some money

c) A lot of money

I'm going to assume that anyone who took that with any degree of seriousness picked option c. You would be right! This is probably not revolutionary knowledge. But now consider you have three tiers of subscriptions to your service, with one making you a little money, one making you some money, and one making you a lot of money. What tier would you like people buying? How can you incentivize people to buy that tier?

1) You offer a wicked good deal with tons of content as your most expensive option

2) You make every option other than the top one suck

Here's the thing... making wicked good value loaded content is expensive for the business. It's a risk, and I've covered in the past that companies hate taking risks. It's much cheaper to sell your best version (which is really just a fully functional average product) for the most money and punish everyone else by limiting features. Chip away enough of them, and you have yourself a Minimum Viable Product. What price are you asking for this Minimum Viable Product? The Shell Price.

This is where the two concepts connect and ultimately make it worse for the customer. As I touched on moments ago, it's punishing you for not throwing tons of money at the business in pursuit of the fully functional product or service. Working in tandem, Minimum Viable Products and Shell Pricing reduce customer experience and customer value.

You just paid $30 for access to the program for a month, but it has bugs. And ads. And it limits your usage.

OR

You could pay $60 to remove the ads, have unlimited usage, and get priority updates.

That $30 Shell Price got you the worst experience. The Minimum Viable Product. It punished you for daring to pay less than the product seller wanted. And it's becoming extremely popular to operate a business model like this. That's why both concepts have become something of a sour note in the industry they reside in.

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Easy Money

The idea of punishing your consumer base seems wrong and like it fundamentally shouldn't work. Where it gets away with functioning is that it relies on the consumer base pushing back against it as a group. Only through sustained group pressure will companies be forced (not decide... FORCED) to add value back in. That being said, companies who employ Minimum Viable Products know how to tap into FOMO and the idea of "Products as a Status Symbol" and can continue as normal.

For companies that have figured out this balance, Minimum Viable Products can make them a lot of money. Only put in as much work as needed and trickle out updates when it looks like they need to make progress. As I said earlier, it's primarily tech companies that use these concepts, but any company can adapt the Shell Price model if they're savvy enough. Here's a few industries and how they've adapted it...

Streaming Services

Possibly the single best example of the widespread use of Shell Pricing and Minimum Viable Products, streaming services jumped on the bandwagon early and set the standard for their industry. Sure there's lots of them, but they get around having to compete by having tons of their own original content. Many of these services are now tending towards having different tiers of subscription and offering "Access" as the only benefit of the base level. As is the norm with these models, the best content is sectioned off behind the most expensive version as a paywall.

Phones

Hardware and software combined don't make the situation any better. Shell pricing is on full display here: "Give us a ton of money and you get the device with nothing else added". Want any warranty if it breaks? Not included. Services? Not included. On top of it all, new phones get released consistently to keep consumers chasing what's new. Are the phones Minimum Viable Products? You could argue that they are not and that they work well enough, but the changes between the generations of phones are so minor that to call them different phones steers them in that direction.

Auto Industry

Bet you didn't expect to see this one here, but it's true! The auto industry employs Shell Pricing and Minimum Viable Products all the time in the sale of its wares. Think about the last time you looked at getting a car. You can buy the car on it's own for the Shell Price, but you're really getting a base model that works just enough to justify the asking price. Warranty, programming, servicing, functionality, and customization (Charge me for a package that gives me the option to have my car be red?? Are you kidding me??) are all locked behind higher tiers of payment and add-ons. You need a spreadsheet to figure it out (or apparently a subscription for heated seats because that's totally normal).

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Make a difference

So how do we combat the degrading value problem? How as an individual can you make a difference not just for yourself but also send a message to these companies that there is value in value? Here are the three best ways you can go about fighting for a better, healthier industry...

Vote with your wallet

Short, sweet, and simple. Companies want money, so force them to make business decisions that fall in line with that objective. Buy quality and don't settle for Minimum Viable Products. Your spending habits tell these companies what they need to do to succeed, and with enough people putting money behind quality and rejecting Shell Price tier options, a clear message can be sent.

Do your research

Often times, there will be many sources available to you online to help you with purchasing decisions. Most people will do independent research online, be it regarding the company or the product, before making a purchasing choice. There are entire YouTube channels and websites devoted to doing such reviews, and it's likely that all the info you need to make an informed decision is out there somewhere. These sources should help you to sniff out a Minimum Viable Product or a severely lacking service being sold at a Shell Price. Speaking of research...

Leave a review

You've benefitted from what's out there, so take a couple minutes and contribute to the conversation! You will inevitably be one voice among many, but sometimes the power of the group is a good thing. Maybe you have something that will add to the conversation around a product and can help someone else with their choices. Don't be mistaken, companies will read reviews left on their products and they will respond if they see a pattern that they don't like. These reviews are sometimes the best way for them to get direct feedback and enable them to "Solution Sell" effectively.

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Driving value

Being aware of what a Minimum Viable Product looks like is half the battle. Keep an eye out for these bare bones offerings and call it out where you can. Word of mouth is powerful and can be one of the best ways to help others become aware as well. Do not be fooled by the Shell Price offering. Yes, stuff is expensive these days, but the cheapest option is almost never the best option (and sometimes it shouldn't even be an option). Be aware of the marketing around new products and always be on watch for what is really being sold to you. At the very least, wait a couple of days for reviews to come out and let the early adopters do their thing. You're not missing out by being a couple days behind, and you stand to save a couple bucks in the long run should those reviews come back negative. It'll take a group effort to ensure that Minimum Viable Products don't become widely accepted, and for every member of that group, the responsibility starts and ends with what you can do. Thanks for doing your part.

~IR

Have you seen any other examples of Minimum Viable Products? How do you research a big purchase? Or maybe you just have a comment to add? Check out the Facebook, Twitter, Instagram, or LinkedIn page and let everyone know. Don't forget to follow or like the page for updates! And share this article if you feel others should give it a read!

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