THE PSYCHOLOGY
OF PRICING
How to Position Your Products to Sell
CARA'S
CORNER
What networking feels like.
I have a fabulous team in Porduct Factory. Each week we get to
nominate a team member for MVP. My first weeks nomination went
like this:
"The Success Magnets are jumping in with both feet. We're
posting and commenting and exchanging ideas like crazy. But for
MVP I wanted to honor one person, Maree Harris from Australia.
She is new to PF but she made it a point to write a post to every
person that signed on to our team. Each post was not only welcoming
but personalized in a way that spoke of encouragement, recognition
and a desire to collaborate. I'm sure everyone was affected by
her warm and caring energy. Thanks Maree, you are a great Success
Magnet!"
When Maree heard of her nomination she responded;
"All I did to win this award was network with you all. I
am absolutely committed to networking. It flows through my veins.
Many people see networking as a way to sell their products, or
do business. I see networking as a way of living my life - a life
style. It's a quality of personality. I think that good networkers
are people who genuinely like other people, value them and want
to build connections and relationships with them. I believe that
none of us can achieve our goals or make a difference alone. We
need one another; we need to work together and support one another
- not just in the Product Factory but in our outside lives as
well. I have always felt that the emphasis on networking needs
to be on building relationships and connections rather than on
getting something for ourselves, or selling or sealing a deal.
If we network solely focussed on ourselves and our needs we will
fail to gain much from the experience. When we give warmly and
enthusiastically without expecting a return we get back 100 fold,
but not necessarily from those to whom we gave.
I won this award, but it's not the award that is so important
to me, it's the richness of the experience I had while winning
it!
Kind Regards,
Maree Harris
www.peopleempowered.com.au
www.womenleadingthefuture.com/blog
What a goal she has set for all of us.
The Psychology of Pricing
I'm
on a quest to post 100 articles on line and to show you how easy
it is, this article is built from an article in the paper. I just
adapted the principles and repositioned them for pricing signature
products. Article ideas are everywhere. If you're ready to earn
free advertising by posing articles everything you need to get
started is in my home study course Article
Magnetism,
Enjoy
the article.
Warmly,
THE PSYCHOLOGY OF PRICING
How to Position Your Products
to Sell
In his article "Pricing tips for selling in a tough market"
in the Wall Street Journal, Jonathan Clements presented pricing
tips for the difficult housing marketing. Using this universal
psychology of pricing I have translated his concepts to help you
price your products to sell.
Make your first number count
Have you noticed how $4.99 looks like and feels like a lot less
than $5.00? Manoj Thomas, a marketing professor at Cornell University's
Johnson Graduate School of Management explains, "We read
from left to right so we anchor our judgment on the first thing
we see. We make that judgment in a fraction of a second."
A $99 home study course will look more affordable than a $100
one. A $124.75 teleclass series will feel like a better bargain
than the same one at $125. Pay attention to number on the left.
It's the one your prospect will remember.
Make effective price comparisons
One study of price comparisons found that, if the left digits
are the same, buyers will focus on the right hand numbers. Thus
an ebook at $12.75 feels a lot more expensive than one at $12.54.
Have you ever been on Amazon ordering a book from an outside source?
The prices vary by only one penny, but you inevitably go for the
cheapest one. We love bargains.
It also turns out that buyers perceive the discount to be larger
if those numbers on the right are declining from two to one rather
than from nine to eight. Go figure.
Sometimes comparisons get out of hand. Have you ever been on
a sales page that says you are getting $3,572 worth of bonuses?
I personally don't need that much information, so it is a comparison
that is not compelling to me. But if you tell me there is an Early
Bird Special in which a $125 teleclass I'm considering is available
for $99 I may jump on it. And you know what, that's a 20% savings.
Which number did you respond to-the dollar amount or the percentage
amount? I'm a dollar and cents type of person but it doesn't hurt
to use both in your copy providing it's a good percentage drop.
What is a reasonable price?
The best way to make a pricing decision has never been determined.
There are guidelines, but no easy to apply rule. Obviously you
want to be within the range your market dictates. When I priced
my first ebook, a colleague said, "Oh well, you can always
offer a discount." I knew then that I had priced it too high.
You may not be able to sell an ebook for $29.95 since you are
probably sitting there with a bookshelf full of very informative
hard cover business books that average $12 each. It's very common
to look at the amount of effort that went into creating your product
and over price it.
Another decision is what your target market can afford. Eckhart
Tolle prices his book A New Earth: Awakening to Your Life's
Purpose at $7.70. In doing so he made it available to anyone
who wants it. He wants to get his message out. And it will be
since he's an Oprah book club selection. Suze Orman felt so strongly
about getting her message to women that for 24 hours she recently
gave away a free PDF of her book Women and Money also through
Oprah. If you have a book that you want to reach as many people
as possible, keep it in a price range that will entice them.
Another consideration is that academics are used to paying more
for a text book than the average reader. Research your market
and stay within a reasonable price range for those you want to
buy your product and services.
Do you want to convey quality or a bargain?
An interesting discovery about the psychology of pricing is that
a round number will convey quality. A precise number will indicate
a bargain. Vicki Morwitz, a marketing professor at New York University's
Stern School of Business says that's because we associate precise
numbers with lower-priced products. A precise number also indicates
you have given a lot of thought to your pricing. Look at Amazon
prices, the last two numbers are all sorts of un-rounded numbers
- $14.37, $12. 64. It makes you feel like you are really getting
a bargain because you assume they have arrived at those prices
in order to be the lowest source for that product.
Make the discount easy to calculate
Make it easy for your buyer to relate to the price cut. If it
is difficult to do the math, they will perceive the savings as
small. A drop from $149.85 to $127.48 taxes anyone's math skills.
But with a drop from $149.85 to $129.85 you can see a $20 savings.
And in a drop from $150 to $130 the $20 savings is extremely clear.
Instead of cutting prices, add bonuses
In my coaching practice I have two ways for people to pay for
my major package. They can pay in two payments, or if they pay
in one payment, they get a bonus of four of my ebooks that are
related to what they will be doing in our coaching sessions. My
reasoning? Every time a prospect pulls out her credit card, she
has the opportunity to reconsider the purchase. Fortunately my
shopping cart can automatically charge monthly payments but my
clients have an opportunity for some valuable bonuses if they
pay in full. What kind of added value can you add to your bundles?
Don't stay married to your price
Price your product or service reasonably and if it doesn't sell
lower your price. If it rushes out the door, consider raising
your price. You could easily do some split testing by having identical
sales pages with different prices and send half your list to one
and half to the other and monitor the results.
Give it time
It takes prospects as many as nine exposures before they purchase.
That's why building your list is vital to your success. An opt
in list gives you permission to market. The prospects are willing
to hear from you again. Through emagazines and special offer promotions,
you will have time to speak to them often enough to build their
trust and get ultimately them to purchase.
One last thought on information products
An information product is not your business, it is an adjunct
to your business. It enhances your expert status, it lets people
move up your marketing funnel. When people come to me for help
in developing an information product, I make certain they have
a strong name capturing system in place on a compelling web site
with strong content that stimulates conversion. Laying that strong
foundation is paramount to your success. Then you can create all
the products you wish and use the psychology of pricing to position
your products to sell.
©
Cara Lumen 2008
www.caralumen.com
Want to post this article in your emagazine? You may as long
as the unedited article is printed in its entirety, and you include
the copyright notice and the following statement:
Cara Lumen, The Vision Distiller, helps pro-active entrepreneurs
translate their passion into a profitable presence on the internet
with a minimum investment by using time, energy, information,
and imagination. Through The Magnetic Marketing Method she offers
innovative, inexpensive, and impactful ideas for internet marketing,
content strategy, and signature product development. Her own information
products are noted for their clarity and richness. Find more articles
like this in The Success Magnets Emagazine at www.caralumen.com
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