Pricing Masters 202



The Pricing Masters... an intensive 5-Day e-mail course on
finding the Perfect Price that will maximize your profit.

If you have a friend who would benefit from taking this
course, please pass this on. Or tell that person to receive
the 5-day course by sending a blank e-mail to...

[email protected]

Refer to this course whenever you price new products and
monitor or upgrade existing ones. Print each e-mail out,
pour yourself a beverage of choice, bring along a pen to jot
down some ideas, and take it all to your favorite sofa. This
is serious stuff -- pricing makes or breaks many products.
So get into a comfortable spot for maximum learning.

Thu Feb 01 01:25:24 2001
Pricing Masters Course 303

Hello again.

Day 3 of a 5 day e-mail course. This is our "over-the-hump"
day. Then we cruise to the finish line. How appropriate
that our topic of discussion for this session is...

... the psychology of pricing.

To get you "pysched" -- but not "psycho" ;-) for today's
information, let's consider the power of the following
selling techniques...

1) the arranged smell of fresh-baked bread in a house to
ignite childhood memories of food or family in the
prospective home-buyer.

2) fresh flowers/produce near the grocery store's entrance
to encourage impulse buying -- something that's not "on the
list".

3) big sale signs at the back of the boutique to force the
customer to walk by all this season's clothing styles.

4) the offer of free money or big prizes on the Web site in
order to get the visitor's click and cookie.

All four strategies above involve pyschology. It's a reality
in the business world today. You've got to be able to get
inside your customer's head. And not leave one empty space
for your competitor! It's a race for "share of mind."

Pricing is no exception. Reflect on the psychology in our
guiding e-commerce statement... The Perfect Price (tm) is that
price that maximizes your profits while building a lifetime
customer through value satisfaction.

How do you define "value satisfaction"? By putting yourself
into your customers' shoes -- simple but often ignored advice.
Sometimes a vendor thinks that s/he knows what's best for
the customer. Let's call it the "mothering-smothering effect."

If you reverse your viewpoint by coming at it from your
customer's angle, then you start to look at your product
differently. (That's the funny thing about pyschology,
it works on both sides of the business fence.)

Price to attract those first-time customers and let the value
of your product "keep" them with you for a lifetime.

So where do you start? That's as easy as counting...

ONE) The most common pyschological technique is to use a
price that ends in any number but 0 or 1. We all know how
much better 99 cents sounds than $1.00 -- and $997 in
comparison to $1000. How W-I-D-E that narrow gap is to our
buying ear.

The customer feels like the saving is MUCH more than 3
dollars... And s/he credits that "good feeling" to you, the
vendor. This effect happens even more so with the next
method.

TWO) "Value-bundling" gives the customer the great feeling
of getting something for nothing. Here products that have a
logical association with one another are grouped together
and one price is set for the combination.

Value-bundling is a powerful method if the price of your
bundle equals the price of the most expensive component.
Yup, you know,the refrain...

"I would've paid that much just for the... "

Want an example?

We value-bundled Make Your Knowledge Sell! (MYKS!) to the
extreme. MYKS! shows you how to find "the infoproduct
within," how to create and publish it, and how to market and
sell it. It's under one single "MYKS!" roof. You need
*absolutely* nothing else to succeed at selling what's in
your brain.

If we had stopped there, the value alone would be terrific.
But we didn't stop there...

We added 7 more indispensable tools -- so MYKS! is actually
"The Complete Infopreneur's Toolkit" and not just a book.
It even includes a half-hour consultation with co-author
Monique Harris, infopreneur extraordinaire...

http://myks.sitesell.com/supertips.html

THREE) 15%, 25%, 40%... how much louder that price tag seems
to scream as the percentage grows. You bet, it catches
the ear and eye of the customer.

Use discounting to...

a) build existing customer loyalty. This is so easy on
the Net. You can reach previous customers with a quick
e-mail and offer them a price reduction on your new product.

To emphasize the point, set up a special discount url for
this select group (which, of course, should include your
deserving affiliates.) Show your appreciation concretely.

Here's ours...

http://www.sitesell.com/discount-directory.html

b) encourage or reward bulk buying. Go beyond the obvious
reduced "per unit shipping charge"... offer "three for $20"
(or better, $19.95) for that $7 bottle of wine. Sure, the
margin is a bit less... but your gross is much better.

Your customer saves on shipping, product cost, and gets that
Runder $20 psychological boost.S And your competitor?...
well, thatUs two bottles of wine that he's not selling to
your customer!

c) compete with your competitors as in the case of seasonal
deals or for special markets like seniors and students.
Who can turn down a good deal? Not me (at least that's what my
wife says!).

Discounting can be a strong tool. But it's not without its
own Achilles' heel...

Define your goal clearly, before you discount. Otherwise,
youUre just giving money away. Who can afford that?

FOUR) The third pricing approach uses the pyschology of
perception. You know that truism... Quality is in the eye of
the beholder. And where does "the eye" land on the Net?
That's right. On your Web site.

If your site makes a great sales effort, you will be able to
build a higher perceived value. And that will support a
higher price for your product. It's *worth* it to the
customer.

This is IMPORTANT -- if you sell via the Web, one of your
site's most important functions is to build perceived value.

-----SIDEBAR-----
As we will see later, you willactually be able to measure
this via the Make Your Price Sell! survey.

http://myps.sitesell.com/supertips.html
-----SIDEBAR-----

Whatever that value is, when it comes to selling on the
Net...

Never price beyond the value that your Web site
creates and that your product supports. Not if you want to
build a successful, growing, long-term business, that is.

Five) The final strategy examines price-sensitivity. I call it
"rubber band" pyschology. Customer perception comes
into play again, as well as competition on the market.

If demand for your product drops when you increase the price
by only 1%, you have a product that is very price-sensitive
or price-elastic.

If on the other hand, doubling the price only causes a
slight drop, you have a price-inelastic product -- that
means that it almost doesnUt matter what price you charge
because people will still buy it...

...within limits, of course.

-----SIDEBAR-----
Make Your Price Sell! finds those limits.

Price-sensitivity is also referred to as "price-resistance."
MYPS! shows you by the use of a line graph how demand for
your product reacts to changes in the price.

But I am getting ahead of myself. It must be the "hump"
effect. The height is letting me see into the 5th day. :-)

http://myps.sitesell.com/supertips.html
-----SIDEBAR-----

OK. That's it for the psychology of pricing.

What's the key point? No matter what approach you use, it
has to "ring true" to the customer. S/he will only be
attracted to your price and product, if it's *worth* it.

Now here's my psychological ploy for this course...

NO HOMEWORK!

See you tomorrow.

-Ken


TO UNSUBSCRIBE
To unsubscribe, send a blank e-mail to...
[email protected]

NOTE: You must send it from the same e-mail address that is
subscribed to this 5-day course.

Contact info: E-mail us at [email protected]

Written by Ken Evoy, M.D.
President, SiteSell.com
(c) copyright 2000, 2001 SiteSell.com Inc.

Perfect Price and Teeter TM GoodBytes. MYPS! patent-pending.



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