Choosing the price for your product?
One of my mentors and heroes in life, Corey Rudl used to say “Test everything, assume nothing”. Few really truly understand that the way he did. I mean he really did test EVERYTHING.. Things you’d never guess.
However, I wanted to mention an experience that came to mind the other day when reading an article in Website Magazine (which by the way is most of the time a pretty good read – although sometimes ameteurish)… Pricing strategy.
Once, while manning the technical support phones at The Internet Marketing Center, I was on the line with a customer who needed some maintenance on his Mailloop account. No problem. I logged into the customer service software and proceeded to add another install to his account so he could re-load the software on a new PC. One thing I noticed that made my eyeballs jump out… He had paid $999 for the software! Now, I had only worked there about 3 months at that moment – and as I understood it, this product was a $379 product. This was way back in 2004.
Test EVERYTHING.
Apparently, prior to launching Mailloop, Corey had the team test every price point, from $99 to $999 and see which one converted best. When you have 880,000 email addresses, doing a few tests of 10,000 doesn’t hurt your numbers! Surprisingly, you may not believe me if I tell you this, but INCREASING your price can increase conversion rate.
WHAT?!?!
Yes! Sometimes, if your price is TOO low, folks will perceive that it can’t be THAT good and not buy it as often as they WILL buy it at a higher price. Sometimes without any changes at all to the copy to justify the new price! Oddly, they found that the BEST conversion rate was at $379… It continued to sell at that price for over 4 years that I was there. You gotta think, those folks who read the EXACT same salesletter and didn’t buy Mailloop for $99?!?
Ever thought about increasing your price? Think about it…. An old partner and amazing salesman I used to work with said that he “value sold”. That was an amazing lesson to me. He didn’t sell for what something cost and then mark it up… he sold it for what he felt it’s true value was…
Meaning if it cost him $399 but would save a customer a million dollars this year, he’d have no trouble selling it for $10,000 where most companies might sell a $399 product for a reasonable markup of $699.
Odd that people are happier to pay a higher price with the value explained.
Daniel J Deyette
