Price it to move

Back in high school, I worked at a family-owned butcher shop in my hometown. As part-time jobs went, it was better than most. In fact, I even learned a thing or two beyond how to cut filet mignons—things that actually had relevance beyond the meat market. However, the simple lessons I picked up as a teenager seem to be lost on some of today's best and brightest technology companies.

I'm not talking about earth-shattering revelations. I'm just talking about prices. I learned how setting a price too high could result in, for example, unsold chicken wings. And though I wasn't privy to the shop's books, I understood how that impacted the bottom line. I also learned that the markup the market would bear was different on each item and changed from day to day. I came to see that a 5 percent markup on pork chops that went out the front door was better than a 15 percent markup on pork chops that sat unsold in the display case.

Fast-forwarding to the present, I think broadband service providers must have missed out on these simple lessons. For far too long, they've been tagging their service at a price that's clearly prohibitive to the masses. I suspect they believe that their infrastructure investments entitle them to a certain profit margin on each subscription. But as I learned in the meat business, insisting on a high markup for each steak may mean you're missing out on the chance to sell steaks by the truckload.

This isn't just about the broadband providers, either. We all need to see broadband subscriptions selling like hotcakes (or sirloin tips, if you will), because wider adoption of high-speed access will create positive energy throughout the tech economy—from the chip level on up.

So please allow me to suggest three cheers for Verizon, which announced a few weeks back that it is reducing its DSL prices by about 30 percent. Instead of $50, the monthly cost will now be $35.

Unfortunately, the other guys haven't followed suit (at least not as of this writing). And that amazes me. If I'm selling New York strips for $10.99, and the store across the street is selling them for $8.99, I'm not going to sell a lot of strips. But this fact seems to escape Verizon's competitors. Again, I'll speculate that they feel entitled to higher unit margins. Cable operators, particularly, may believe that their product is so inherently superior to DSL that it should command a higher price.

My advice for broadband providers (with all due respect): Get over yourselves. Your stubbornness is holding this market back. Start by lowering overall prices. Then, take a page from the meat industry's use of the "prime" and "choice" grades. Roll out tiered offerings, under which the bandwidth-hungry pay more to feed from a pipe that guarantees a fat data rate.

My boss at the butcher shop had a saying, "Pile it high and let it fly." Translation: Stack those T-bones and porterhouses attractively in the case, set the right prices, and listen to the cash register ring. It's high time broadband providers heed that wisdom and price their product to move.