Want To Raise Prices? How To Best Communicate With Existing Customers On Price Increases

increase prices

Remember when you were 10 years old and it was almost time for bed?

At the moment it was bed o’clock one of your parents would snatch you up without warning and march you straight to bed, right?

Of course not

Parents aren’t silly.

Even when they know that bedtime is at the same hour every night, they still do the little “warning trick”.

They give you sufficient notice that it’s going to be bed time soon.

Clients appreciate this notice as well

They may not be ten years old, but even they know that invariably it’s going to be “price rise o’clock”. They’ve seen it coming for years, and as you announce the impending price rise, they nod their heads and continue doing whatever it is they’re doing. Yup, just like ten year olds, they completely ignore you.

But then you’ve got to turn on the pressure a bit.

You’ve got to let them know that the clock is ticking

And the best way to communicate with existing customers is to make an announcement. Have a clear date and time (when you’re raising the price) on the announcement. And a specific amount or percentage as well.

If the product is $25, a $10 increase sounds like nothing especially if it’s not a recurring purchase. So instead of dollar values, use a percentage instead e.g. 53% increase. Of course, the odd figure always gets the attention as well. So if you’re going to increase something, put in a figure of $11.20 or 53%.

And then take a deep breath and start the roll out

The best way to rollout an increase is over a very short span of time. The rollout looks like this:

Step 1: You announce the price rise well in advance, maybe a month or two in advance.

Step 2: You mention it at least a couple of times during that coming month (or two)

Step 3: It’s then time to give specific dates when it’s going to increase (e.g. it goes up on 1st April)

Step 4: Have a pressure point: This weekend is the last weekend before it goes up by 53%.

Step 5: Make sure you send out an email on Friday and then on Sunday (if it’s the weekend). This will cause a surge on Friday, nothing much on Saturday and then another surge on Sunday.

This sequence is pretty much what any kid goes through anyway

It’s time to go to bed. Bed time’s coming, brush your teeth. Have you got your pyjamas on, yet? Ok, it’s off to bed in three minutes. Switch off that light, and see you tomorrow.

But what if the price rise goes all wrong?

What if you get several clients complaining? What if many unsubscribe? In all the years we’ve run our business, we’ve always had people unsubscribe. It’s the nature of the game. Some people don’t want to pay higher prices. And that’s fine. It’s their choice. But you can’t hang around that old price tag forever. And to be fair, you gave them fair warning.

It’s going to be price rise o’clock soon

Let your clients know.

Do the little “warning trick”

And then raise your prices.

You’ll wonder why you didn’t do it before!

Next Step: Links you should visit

1) How to  design a solid home page that helps customers find their way around, and do what you want them to do

2) How To Put That Zing-Kapow In Your Articles (With StoryTelling)

Top Selling Products Under $50

Testimonial Secrets: Powerful Techniques to Get Better Clients-And Sales
Story Telling Series: How to suck your audience right in, in a matter of seconds

Sales Pages: How To Write Benefits and Bullets That Speed Up Sales
Article Writing: How To Speed Up Article Writing With Simple Outlines

Visual Basics: How Visuals Help Increase Sales Conversion On Your Website
Design Clarity: How to put sanity into your design with some really simple tweaks
Chaos Planning: How ‘Irregular’ Folks Get Things Done

New! Critical Website Components: How to write compelling content for your key web pages
Free! Excerpt of The Brain Audit: Why Clients Buy And Why They Don’t 

Black Belt Presentation Series: How to completely control the room-without turning anyone off?

Online Membership Website: How To Build A Powerful, Community-Driven Membership Website

Next Step: To get more Psychological Tactics
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Why A Different Name Can Increase Your Product Price By 1000%

Increase Product Price

Is a sum of $229 expensive?

It really depends, doesn’t it?

What’s the $229 for?

Is it for a book?

A half day event?

A workshop?

An online workshop?

A course?

A set of 8 DVDs?

What always matters isn’t the content itself, but the packaging

So, for instance, let’s say you took a book and positioned it at $229, you’re actually getting your audience to compare your book to all the books out there. In such a case, a book may well be $16, and some books may be $37 or $100, but the moment you go into the $200+ zone, you’re asking your clients to make a big leap of faith. You’re asking them to pay 1000% more than any book out there. Doesn’t make sense, does it? It makes perfect sense (we’ll get to it shortly), but let’s do nothing but change the packaging.

So now the book is a self-study course

What’s in a self-study course? Why it may consist of the same elements outlined in the book. Now instead of one book you have several segments of the book separated into sections. You may throw in some video and some kind of Facebook group as well.

There may even be some additional interviews or bonus. But can you add more in a course than you can in a book? No you can’t. A book is likely to have almost identical information, and the only thing that’s changed is the name you gave your product.

Let’s do it again, shall we? Let’s change it into a live offline seminar

Is a live seminar more valuable than a course or book? You bet it is, and a $229 live seminar (even a half-day seminar) could be considered a bargain. Yet, is it likely that you’re going to get different content?

Nope, nope and nope.

The content is likely to be the same because as the speaker gets on the stage, it’s more than likely they’re going to give you the very same slides that could easily fit into the self-study course. Yes, there may be some advantages to a live seminar, like networking or actually leaving your computer behind, but is the content any different?

Not really and here’s the proof

In 2009, I made a presentation at an event in the US. Those who’d attended that event paid $2000 to be there. Yes, I was one among 9 other speakers. So you could safely say that per head, I represented $200 of the workshop. So would you pay $200 to watch that presentation?

200 people did on that given day. And we know they liked our presentation, because on that day we sold more product than most of the other speakers. The question is: would you now pay $200 for that information if it were on YouTube?

Well, it is. And you know what that means, right? It’s free. So the very same information that cost an attendee $200 is now complimentary. What’s changed? Just the packaging, not the content.

But surely not all media is the same

No it’s not. For instance, I bought a ton of books on watercolours. I borrowed the second ton from the library. I’ve bought videos by the dozen on the subject, but I learned more in one workshop in Spain, than I learned from all those books.

Why? I can’t say for sure. Maybe I was ready. Maybe the teacher had a better method that I could learn from. In fact, one of the books I read were from that very teacher, but being there and being part of the experience made a huge difference to my skill set. So all media is not the same.

All the same, packaging counts…

You can take a book and make it a course, and sell it comfortably at 400% higher.

You can take a course, and make it an interactive group-based course and sell it at 10000% higher than an Amazon-priced book.

You can take a course online, put it offline and charge a lot more.

The content may, or may not change, but the price sure does.

Does this mean we’re getting ripped off?

No, not at all. A product must, for the most part, meet the expectation of the client. When we go to Amazon, we expect a book to be priced at a certain level. If it’s priced too low, you reject that deal.

And here’s proof: how would you like to go to a 7-day offline copywriting course for $229? Sound bizarre, doesn’t it? And it is. You are already finding fault with the course, even though you have not a clue what it’s all about, who’s conducting it or even why it’s so cheap? A price must, for the most part, sit at the same level as your expectations.

So why price a book at $229 if you’re going to meet with resistance?

Good question. It’s what Starbucks did with their coffee. When Starbucks entered the US market in a big way, the rest of the US was dishing out endless “coffee” for $1 or so. Then Starbucks brought in their fancy $4 lattes. That changed the perception of the buyer in the market. Eventually, every coffee rose to meet the Starbucks level.

Today, your perception of good coffee is not $1, but $4. Anyone offering you coffee for $1 would instantly be met with your disdain, or at least suspicion. Pricing a book at $229 sorts out the buyers who are willing to trust your “coffee” over the swill that’s out there in the market. They’re segregating themselves from the rest with their decision, and you’re in turn getting customers who are more likely to consume and apply your product.

Pricing is very dependent on packaging

For the most part, you don’t want to rock the boat. If you go too low, your work is disregarded and ignored. If you go too high it’s also met with a ton of resistance. And so naming your products in a way that befits the price is critical.

Is a sum of $229 expensive?

It really depends, doesn’t it?

Next Step: Links you should visit

1)  7 clear steps to make your own marketing more compelling

2)  How To Speed Up Article Writing With Simple Outlines

Top Selling Products Under $50

Testimonial Secrets: Powerful Techniques to Get Better Clients-And Sales
Story Telling Series: How to suck your audience right in, in a matter of seconds

Sales Pages: How To Write Benefits and Bullets That Speed Up Sales
Article Writing: How To Speed Up Article Writing With Simple Outlines

Visual Basics: How Visuals Help Increase Sales Conversion On Your Website
Design Clarity: How to put sanity into your design with some really simple tweaks
Chaos Planning: How ‘Irregular’ Folks Get Things Done

New! Critical Website Components: How to write compelling content for your key web pages
Free! Excerpt of The Brain Audit: Why Clients Buy And Why They Don’t 

Black Belt Presentation Series: How to completely control the room-without turning anyone off?

Online Membership Website: How To Build A Powerful, Community-Driven Membership Website

Next Step: To get more Psychological Tactics
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The Science of Undervaluing Yourself (And How To Overcome It)

The Science of Undervaluing Yourself (And How To Overcome It)

Do we charge less?

Do we value ourselves less than we should?

Do you think that sometime in the future, there will be this perfect product at the perfect price, and the perfect client will come along?

I used to have a client who had exacttttttly the same problem

And I can categorically tell you that everyone without exception has the same problem. Some have it almost perpetually. Some less so. But everyone has it. When we started out I’d do consulting. I’d spend hours with someone, even give a money back guarantee (some one actually took their money back after 8 hours of consulting). And even our products/courses were terribly under-priced.

I actually had a client say to me: You should charge more!

And I was terrified of increasing the prices

Who would pay that much? And yet, I went from $1,500 to $3000, $3000 to $6000. $6000 to $10,000. And there were still takers. Our consulting went from $75 to $550 or thereabouts (per hour). Still takers. You may say: People know you, Sean. You already have a reputation.

But you’d be beating around the bush. I could still be charging —or rather undercharging.

Remember that client I was talking about before—the one who undervalues himself?

He’s well known now, after a rather torrid start for about 10-12 years. Even today he’s increased his income and prices only marginally.He gets clients that can’t pay. He still discounts. He still keeps his fees as low as possible. He believes that clients can’t pay. And he’s right.

I know this because of one of my earliest clients. She was huffing and puffing to pay my 10-part, low fee. Then one day she missed a consulting class. Why? Because she had to buy a car: Only $30,000.

I’ve had clients who’ve not had $250 to spend, then gone on vacation and blown up $2500

I’ve had clients who’ve said that have gone and signed up for some sort of pie in the sky for $12,000. I know that kind of person. I was that kind of person. When I was starting up in marketing, I blew up $12-14k on a single workshop when that constituted about a fourth of my annual income.

So what am I saying here?

It’s all in your ear

There’s someone sitting on your shoulder and screaming in your ear.

They’re screaming stupid things. And you should not be listening.

But what if that screamer was right? What if indeed you couldn’t raise your prices?

Well that’s an easy answer

Start up something that doesn’t exist.

In 2006, we started up the Protégé. It didn’t exist.

We put a price of $6500 on it. Wrote a sales letter. And waited. Well no we didn’t wait. We tried to sell the heck out of it, and yet it wasn’t something we were depending on. You see it was a fictional kind of thing. In our minds it could work. Or not. If it didn’t, we’d get a whole bunch of copy writing practice and we’d get at least some folks who’d be keen to join something else in future (think of it as an advertisement for the future).

We surprised ourselves

The Protégé program was oversubscribed in 2006, 2007, 2008. We didn’t do any in 2009/10/11. But think about it. It started off as a dream that could fail. That if it failed it wouldn’t matter. And yet it succeeded. So well in fact that I had to stop it, just that I had to step back just so I could do other stuff.

The point is we’re all good at stuff

We just don’t have the confidence.

Give us someone who’s willing to listen and we’re good at stuff.

But we’re scared of pricing. We’re terrified of being turned down. Of failing. So scared that we won’t even dare to entertain the idea, let alone start up. But there’s a way around it.

Start up a fictional project/product/service

One which you don’t care if it fails or succeeds. Put a price on it. A price that you think is at least 50%-100% more than you currently think it’s worth. And if it succeeds, you’ll prove it to yourself. If it fails, it doesn’t mean it’s failed. It just means it’s failed “this year”. Or this “quarter”.

Again, how do I know this?

In 2011, the Article Writing Course sold out in 24 hours. Two batches. Plus a ton of home study courses. Consider that the Article Writing Course is priced well over $2000 and you see the problem. Why would anyone pay $2000 to learn to write articles? That was the question swirling in my mind back in the year 2006.

We were so reticent about the course that we didn’t offer it to the public until 2007 or thereabouts. In 2007, I put it out there just as a lark. And we were still reticent. It was the cheapest of our courses. And guess what? Fast forward to 2013 and it’s got a five month waiting list. Next year it may have a seven month waiting list—at a higher price.

So where’s the problem?

The problem is in your brain.

My brain. Our brains.

We undervalue ourselves.

And we keep at it. And believe me, now matter how big your reputation grows. No matter how much money you make, you’ll still be undervaluing yourself.

And in case you’re wondering, this isn’t about just charging insane sums of money

I’m now comfortable doing that, we know we have great products and services. For instance we know that our courses are the toughest in the world. There’s simply no trainer that structures a course like ours, because our courses are based on consumption—not conversion. This means that when you sign up, you’re there to succeed, not to fail.

And it’s not boot camp, but heck it’s tough. And it’s not just tough for you, it’s bloody tough for me as well. I’m there in the trenches with you. As an example the Article Writing Course started in early Feb. In less than a week, the group of 35 people had generated over 2000 posts. I wrote almost 550 of those posts. Think about it. Does any trainer do that? 550 posts a week? That’s madness.

No it’s not

It’s what you would do for your clients.

It’s what you could do for them.

But you can’t work for peanuts.

Those peanuts have to come out of your brain and need to be fed to that monkey who’s been sitting on your shoulder—and shouting at you.

Your prices, your lack of value—it’s all in your brain

You’re believing that monkey.

It’s time to step out. And change your prices. If not change your prices, create a fictional product/service. Something you’re sure no one will buy. And put in fictional prices that are reasonably higher than you have right now.

And be shocked when someone does buy

Even if one person buys. Even if you get one question asking you for more details, you know you’ve hit pay dirt.

The lack of value is in your brain.

Tell that monkey to be quiet.

It’s time to revalue yourself. And revalue your future.

Because if you don’t do it, no one will.

Top Selling Products Under $50

1) Testimonial Secrets: Powerful Techniques to Get Better Clients-And Sales
2) Story Telling Series: How to suck your audience right in, in a matter of seconds
3) Sales Pages: How To Write Benefits and Bullets That Speed Up Sales
4) Article Writing: How To Speed Up Article Writing With Simple Outlines
5) Visual Basics: How Visuals Help Increase Sales Conversion On Your Website
6) Design Clarity: How to put sanity into your design with some really simple tweaks
7) Chaos Planning: How ‘Irregular’ Folks Get Things Done

1) Black Belt Presentation Series: How to completely control the room—without turning anyone off?
2) New! Online Membership Sites: How To Build A Powerful, Community-Driven Membership Website



Why Customers Choose The Higher Priced Product (More Than 95% of the time)

Why Customers Choose The Higher Priced Product (More Than 95% of the time)

Imagine you’re going to a workshop.

The price of the workshop is $700 (Let’s call this Option A). And then there’s a premium version of the workshop that’s priced at $770 (Let’s call this Option B). Which of the two options would you choose? The $700 or the $770 option?

I know, I know. You want more detail, right?

OK, here’s more detail. Option A and Option B are exactly the same. Identical in every respect. If you get cookies and muffins and 200 pages of notes for Option A, you get cookies and muffins and 200 pages of notes for Option B. There’s no difference at all. You get every darned thing you can think of, no matter which option you choose.

Now will you pay $700 or $770?

Seems like a ridiculous question, doesn’t it? And yet, would it surprise you to know that over 95%, and sometimes even 100% of our clients pay the higher price? Ah, now I’ve got your attention. And besides, you’re sure I’m hiding some detail from you. No one in their right mind would pay more for exactly the same thing.

And you’re right

It’s not exactly the same thing. The bonus tips the scales in favour of the Option B. Bonus? What bonus? Let’s go back to that workshop, shall we? Let’s say that for Option A, you got the workshop (with nothing held back). But for Option B, you got the workshop, as well as a special 2-week course implementing the elements of the workshop. And let’s say that 2-week course is priced at $500 (normally).

Immediately you do the math in your brain…

Option A = $700 (For the workshop)

Option B = $770 (But it’s not just the workshop. You get a course worth $500, and just for $70)

Now your brain is like a fried cutlet

It knows that $700 is the sensible option, but not the smart option. Because for just $70 more (that’s 10% more) you’re getting a follow up course worth $500. And even if you can’t do the math, you know for a fact that you’re getting more for less. A lot more, in fact.

So then it’s easy, right?

To entice the customer to choose Option B, all we need is a bonus. Let’s just find something that’s worth $500 and chuck it in.

In fact, taking the example of this workshop itself, let’s just say we pull out the $500 follow-up course and put in another option. Let’s say you removed the follow up course bonus and instead gave $500 worth of audio recording of the workshop.

Would 95% of your buyers still choose Option B? No, they wouldn’t. It would almost immediately slump to about 50%. And there’s a reason why. There are people who prefer to read, instead of listening to audio. And for them, they’re not getting $500 worth of goodies. Instead they’re paying $70 for no return. So they choose Option A instead, which is cheaper.

So what is the critical element that makes them choose Option B?

The element is “something so amazing, that it’s perceived to be almost better than the product or service itself”. Let me give you an example. Let’s say you’re having a course on cartooning (like we do at Psychotactics). And now you are offering two options.

Here are your choices

Option A = $689 for a 3-month course.

Option B=  $789 for a 3-month course + Composition methods that makes cartoons jump from the page + Learn Critical Photoshop techniques in 30 minutes

No choice, eh?

Correct. There is no choice. Because now your eyes aren’t tracking the 3-month course. Your eyes are tracking the bonuses. The bonuses seem more valuable than the product itself at this point in time. You probably already know that there are some things that mark out the experts from the average cartoonists (yup, that’s the composition methods). And you’ve struggled with the beast called Photoshop on occasion. And anything that would teach you to draw, and use Photoshop in a really intelligent way would be worth the kopeks you’re about to pay.

But it doesn’t stop there

Just listing the bonuses is a good idea. But you need to add two more things:

1) You need to put a value on the bonuses.
2) You need to explain WHY they’re important.

1) Value on the bonuses: Is the Photoshop technique section worth $25 or $150? That composition stuff you’re doing: Is it worth $20 or $250? If there’s no value, how would the customer know? But when there’s a value or price on it, it’s clear, because then they add up the price and realise—oh, this Option B is worth so much more. But it doesn’t stop there, either.

2) You need to explain WHY these bonuses are important: Is there any more detail about what Photoshop techniques you’ll cover? Is there any information on how much time I’ll save (even if I’m a competent Photoshop user?) And then what about the composition stuff? I’m not sure I want to learn composition, because it sounds ugh, like learning scales or learning tables in math class. And so, you need to explain.

In short, you’re treating the bonuses with a lot of care. You’re explaining, you’re putting value on them. If you can, you should be demonstrating your bonuses with a visual (online) and with boxes or graphics (in a live presentation).

Now Option B isn’t just Option B

It’s the most desirable option. It’s the option the customer must have at all costs. And most customers do. But the bonus needs to be desirable—and you have to make it yummy as heck. It can’t be something (like the audio recordings) that will be rejected outright by 50% of the audience. And it can’t be something that you just found on your desk and threw in as a bonus. You have to make that bonus a star. You have to really drive home the facts and the price/value.

In fact, here’s what I do in most cases

I start with the idea of the product, and then I write out the bullets. For instance, right now I listed all the things I’d cover in a series of books on Community-based membership sites.  And I listed the bullets. And then often, I’ll get clients to choose which are the most desirable elements.

Then I unbundle that element, and give it prominence of its own, often making sure that the bonus has enough clout to almost stand alone as a product of its own. Yes, you need make it that valuable.

But then, at other times, I’ll add on a bonus based on something I’ve created specially for the event or course or product. Or I’ll use something that I have in my archives that’s extremely desirable.

And here’s one way to know if your bonus is truly desirable

Take it away. Yes, take it away. Have you ever given an ice-cream cone to a child and then taken it away. Well do the same for your client. Show your client the product/service, and then list and explain the bonus.

Then take the bonus away.

Does the client throw a tantrum?

If so, that bonus is really desirable. So with the course above, the follow up course was really desirable. The Photoshop and composition techniques, ditto. When you take it away, the client must feel real loss.

So ask yourself:

1) Have I got desirable bonuses? Are they almost more desirable than the product or service itself?
2) Is the bonus such that about 50% of the audience may reject it for some reason?
3) Do I have a value listed on the bonus? Does that value seem more or less accurate or over the top?
4) Did I bother to explain why the bonus is important?
5) Did I have any additional images that show off the bonus?

If you answer yes to most of the above (si, you can get away with not having all, but it’s not ideal) then there’s no reason why the client won’t buy the higher priced product. In about 8 years of running this system of Option A and Option B, we’ve had 95% of clients who’ve chosen Option B (the more expensive option).

And with the most expensive purchases e.g. The Article Writing Course where the prices hover near the $3000 mark, the strike rate is 100%—yup, every single one chooses Option B.

That’s because clients aren’t idiots

They know value. But only if you explain it. And put a price tag on it. And when you do, you get outstanding results.

Only 95-100% of the time!
P.S. Do you have a story on how clients choose higher prices? Share it here. If you have a question, I will answer it here.

Why You Need The Brain Audit

“What do your customers think? What would make them buy?”

The Brain Audit: Why Customers Buy And Why they Don't

In the Brain Audit – Sean teaches 7 steps on how to form killer communication pieces that makes people buy from you.

The Brain Audit is a simple psychological system that everyone can use in their communication to increase their profits.”

Ankesh Kothari – Biztactics, USA
Read more about The Brain Audit

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1) NEW! How To Put That Zing-Kapow In Your Articles (With StoryTelling)
So what are the elements of a well-told story? And why have they been playing hide and seek with us for so long?

2) You already know that 80% of a sales letter depends on your headline.
So what’s the remaining 20% that causes customers to buy? Find out more

3) Do You Often Hit A Wall Called ‘Writers Block’?
Learn how the core elements of outlining can save you from the misery of writing your next article.

4) Do you know that visuals immediately improve your sales conversion?
Learn how to create drama and curiosity and help improve your web page conversion with visuals.

5) Do your websites, brochures, presentations, etc… confuse your clients?
Put some sanity into your design, even though you are not a designer?

6) Chaos Planning
Year after year you sit down and create a list of things you want to achieve. Then suddenly half the year is over, and you’ve not really moved ahead as you’d expected.
Learn Why Most Planning Fails: And The Critical Importance of Chaos in Planning.

Black Belt Presentations
How to create presentations that enthral, hold and move an audience to action.

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Pricing: Should You Allow The Customer To Decide?

Pricing: Should You Allow The Customer To Decide?

In the year 2007, the rock band Radiohead did something really unusual. They gave their customers the chance to pay whatever they wished for the album. If you wanted it free, it was yours to have. If on the other hand you wanted to pay a few bucks, well, that was your prerogative as well.

And guess what happened next?

Radiohead fans went wild, despite the fact that the downloads weren’t CD quality. So how much did Radiohead make from the ‘pay as you like’ concept? Radiohead won’t say. So why won’t they say? We don’t know the answer for sure, but this much we know: Without a price tag, you’re giving a customer more stress than that customers needs or wants.

And here’s why a lack of a price tag drives customers crazy

Imagine you’re in the supermarket. And you have five thousand items to pick from. And every item has a ‘pay as you like’ tag. So how do you decide how much to pay?

Immediately confusion sets in, because prices are impossible to gauge. So as you head through checkout—and if you’re kinda ethical about your purchase—you’d have to work out every single price in your head. Then the check out person would have to punch in every single price. And the lines would extend forever.

Products without price tags set off a dilemma in our overtaxed brains

Are we paying more for a product or service? Or are we paying too little? If we pay too little, the company producing our favourite brand will soon go out of business and we won’t get our favourite stuff.

So that’s not much good. But what if we paid more? That’s kinda stupid too, isn’t it? So the best recourse would be to pay the right price.

But what’s the right price?

It’s impossible to tell, isn’t it? So incredible as it sounds, the customer does what most Radiohead fans did. They just downloaded the product absolutely free.

And we know this for a fact, because despite the product being freely available on Radiohead’s own site, the downloads were largely through the bit torrents. Ironically downloaders were stealing free music. The ‘pay as you like’ experiment didn’t seem to be working so well, after all.

But surely ‘pay as you like’ prices work

They do, but is it profitable enough for you as a service provider to keep playing this game of pricing roulette? You’re not only confusing the customer, but now have the hassle of working out when at which point the customer should pay.

Should they pay before they use your products—or after? And what if they don’t use the products at all, simply because they feel it was ‘free’? Do you still nudge them to pay, or leave them alone?

Pricing exists for a reason

It saves us the mental burden of having to calculate value—and hence pricing. It helps us make reasonably quick decisions. And it helps you stay profitable—if you price your products and services correctly. And even Radiohead had a plan that involved pricing.

Right after they gave away their product, they also put out box sets, CDs, vinyls and high-quality digital downloads. And there was a specific price on every product, some products ranging as high as $80. They sold 100,000 (or more) of the box sets and did over three million product sales—all with a price tag.

You’re no Radiohead.

You don’t have a huge following.
You can risk the ‘pay as you like’ concept, and for the most part you’ll find that it buys the beer, but won’t pay the bills. And certainly won’t get you the three-month vacation.

Pricing exists for a reason. Bite the bullet and charge the price. It’s a far sounder strategy for you—and your over-taxed customer!

Pricing: Should You Allow The Customer To Decide? Share your thoughts here.

Product Offers: Links you should visit

Before I read the Brain Audit, I felt like I didn’t know what my marketing materials, sales pages, tag lines, and headlines were aiming to achieve.

I’m another one of those who saw Sean around here and there and I really respected his cut to the chase teaching style.

What an eye opener! The Brain Audit broke the sales process down into a series of steps that make so much sense. But don’t be fooled by the simplicity. There’s a lot of work to be done, but I get it now.

After the Brian Audit I feel like I have the inside scoop on these tools  and a much, much better grasp on how to use them.

Thanks Sean, and the chicken recipe is a plus too.”

Cassandra Truax, Worm Rancher
San Antonio, TX, USA

Find out how —The Brain Audit can help you

I was wary of signing up and paying for a forum or another membership site

“If you suspect that your business could be bringing in a lot more revenue but you don’t have a clue how to make that happen without hype or hassle, 5000bc is a must-have resource.

“I honestly didn’t see what 5000bc could offer me that I couldn’t get from Sean’s books. Besides, how could a bunch of people – most of whom are not business experts – help me build my business?”

I joined anyway because the price was right and I wanted the information that came with the premium membership. ;-)

The information and support I received from Sean and my fellow “cavers” about a single Web page was directly responsible for selling $10,000 worth of books in less than two weeks.

Unlike many Web communities, 5000bc members are active and to the point. Sean keeps adding content that drills down to specific problems in business and then shows you how to solve them.

Try it. You won’t regret it.”

5000bc: Small Business Marketing Memembership| Molly Gordon testimonial
Molly Gordon, Master Certified Coach
Shaboom Inc, USA

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Products: Under $50NEW! You already know that 80% of a sales letter depends on your headline.
So what’s the remaining 20% that causes customers to buy? Find out more

1) Do You Often Hit A Wall Called ‘Writers Block’?
Learn how the core elements of outlining can save you from the misery of writing your next article.

2) Do you know that visuals immediately improve your sales conversion?
Learn how to create drama and curiosity and help improve your web page conversion with visuals.

3) Do your websites, brochures, presentations, etc… confuse your clients?
Put some sanity into your design, even though you are not a designer?

4) Chaos Planning
Year after year you sit down and create a list of things you want to achieve. Then suddenly it’s March, and you’ve not really moved ahead as you’d expected.
Learn Why Most Planning Fails: And The Critical Importance of Chaos in Planning.

5) Nothing bugs you more than a painful client.
A client who hassles you at every step of the way. Learn how to use the power of the ‘six critical questions’ to get incredible testimonials—and attract clients that make every day an absolute joy.

NEW PRODUCT! Black Belt Presentations: How do you create presentations that enthrall, hold and move an audience to action?

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Pricing Too High: How Do You Get Out Of A Sticky Situation?

Pricing Too High: How do you get out of a sticky situation?

On June 29, 2007, Apple brought out the iPhone—and then promptly cut back the price by a third as December approached. That was a chunky $200 off.

And buyers got mad.

Especially when you consider Apple’s situation where early adopters are more rabid than the usual rabid fans. These early adopters would have slept out on the sidewalk and eaten clammy sandwiches just to get their hands on the phones.

In the minds of the customers, Apple had cheated them.

And for good reason too. Not only were the phones cheaper, but instead of the 4GB phone, you were now getting an 8GB at a cheaper price. So what happened next?

As you can imagine, there’s not a lot you can do unless you plan to hand out $200 bills to everyone. Apple chose to give a $100 voucher—not cash. This meant you had to buy more product from a company whose behaviour had just cost you intense frustration.

You’ve run into the classic ice-cream cone situation

If you give an ice-cream cone to a child and then take it away, you’ve got two options:

Option 1: Give the cone back.
Option 2: Let the child bawl.

In Apple’s case they let the child bawl

There were hundreds, maybe thousands of angry emails. Blogs flared up with angry comments. But once the moment passed, most customers  forgot the incident just as a child forgets about the ice-cream cone.

And it wouldn’t matter much if Apple had waited. As a customer you’ve felt the intense frustration of buying a product at one price, only to find that it’s available much cheaper elsewhere. Psychologically this affects you and makes you feel like a fool—but you soon get over it.

And that’s what most of your customers will do

It’s almost impossible to replace cash with something else. Almost impossible, but not impossible. The way around the situation—especially for a smaller company, is to give a replacement bonus that far exceeds the original difference.

So if we were to take the Apple case-study, for instance, the grouse was that the $100 voucher was not enough to reduce the irritation factor. If on the other hand, they were given a $400 voucher, then every single future customer would fervently pray that Apple reduces their prices, just so they can get an ‘unexpected’ windfall.

With Apple, such a move would set a crappy precedent

For the average small business, this is no precedent at all. You’re just saying: “Hey, I made a mistake. And here’s how I’m making an attempt to fix the mistake.” And you give the bonus.

The bonus would have to be at least equal to, or greater than (better to be greater than) the original difference (e.g. If your price is now reduced by $200, then the bonus should be $200 or more—preferably more!)

But how do you get these bonuses?

The obvious option is to think of dipping into your pocket and paying for the bonus yourself. This is a first option. However there are several ways in which you can ask other companies for bonuses.

Of course this depends on your number of sales, and if your sales are smaller, then you can get some pretty nice bonuses in the form of software, hardware etc (Hint: You’ll need to contact the PR dept. and let them know why you’re a good candidate for these freebies). However information is also highly prized. A secret entry to a website, a special report etc., will help to soothe the pain.

However you can’t stop the bawling

There will be those who complain, and rightfully so. And like a parent, you may have to step aside. No one likes price changes—whether the prices are going up or down. And while it may seem that the customer is always right, the fact is that things change. The computer I run today would have probably cost $20,000 about 15 years ago.

Things have changed, and hence prices change. It’s something that the customer has come to accept. And if your business ended up pricing something too high and now wants to reduce the price, that’s just how things are. It sounds rude. It sounds anti-customer, but a deal is a deal at the point of the deal. If things change, the deal changes. We may not like it, but we all know that to be true.

Ideally, however, your pricing should move up, not down

You already know that, and it’s probably too late, but moving up is better both for you and the customer. Moving up gives you the feel of the market and as you raise your prices, you can see the direct impact on sales. If you use a systematic procedure like the Yes-Yes Factor, you’re almost guaranteed to get consistently higher prices without ticking anyone off.

If you reduce prices you’re going to tick off someone. But it also depends on the loyalty of that customer. In Apple’s case, the brand loyalty was enough to quell the angry temper. Over time, your best weapon is to have such an amazing product or service, that customers will forgive you for it and keep coming back.

So do a great job—and next time around start at the bottom and work your way up!

Did you make a mistake in your business? What did you do to fix it? Share your experience here.

What do your customers think? What would make them buy?
In the Brain Audit – Sean teaches 7 steps on how to form killer communication pieces that makes people buy from you. The Brain Audit is a simple psychological system that everyone can use in their communication to increase their profits.”

Ankesh Kothari – Biztactics, USA
Judge for yourself
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“The membership fee is less than what I pay for my annual chamber of commerce dues, but the value I get is so much greater.”

“5000bc has some amazingly brilliant, successful and inspiring business people from all industries. I can’t believe how helpful and friendly the forum members are.

One of my objectives when signing up was to be in the company of business people more successful than me so I could learn from them. I definitely found an abundance of them here. I am also impressed at Sean’s involvement in the day-to-day conversations taking place in the forums.

The quality of interaction and the caliber of the other members makes this a great place to visit and be inspired to improve my own business.”

Natalya Murphy On 5000bc Membership For Small Business
Natalya Murphy
Washington, DC, USA

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Products: Under $50

1) Do You Often Hit A Wall Called ‘Writers Block’?
Learn how the core elements of outlining can save you from the misery of writing your next article.

2) Do you know that visuals immediately improve your sales conversion?
Learn how to create drama and curiosity and help improve your web page conversion with visuals.

3) Do your websites, brochures, presentations, etc… confuse your clients?
Put some sanity into your design, even though you are not a designer?

4) Chaos Planning
Year after year you sit down and create a list of things you want to achieve. Then suddenly it’s March, and you’ve not really moved ahead as you’d expected.
Learn Why Most Planning Fails: And The Critical Importance of Chaos in Planning.

5) Nothing bugs you more than a painful client.
A client who hassles you at every step of the way. Learn how to use the power of the ‘six critical questions’ to get incredible testimonials—and attract clients that make every day an absolute joy.

NEW PRODUCT! Black Belt Presentations: How do you create presentations that enthrall, hold and move an audience to action?

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Why It’s Silly Not To Announce A Price Rise

Why It's Silly Not To Announce A Price Rise

Imagine you’re driving down the road to fill some petrol.

As you get to the petrol station, you see the headlines on the newspaper, letting you know that petrol prices are likely to go up by 20 cents.

What do you do?

Fill just $10 worth of petrol in your tank?
Or $20?
Or do you fill the whole tank?

You know the answer, don’t you?

You sure as hell filled up the tank to the brim, didn’t you? Even if filling up your tank is not what you usually do.

But notice something?

The price of petrol hasn’t gone up. It hasn’t gone down either. Yet you deviated quite radically from your normal behaviour. In most cases, you almost never fill the tank except when you’re headed for a long drive out of town. And here you are, making sure every darned droplet drips into your fuel tank.

Is every car owner headed out of town?

Because every car in that petrol station, and across the country, is mirroring your actions, based on a headline of prices going up, up and away.

Yet you’re afraid to raise prices, aren’t you?

You’re afraid customers will leave. You’re afraid you’ll be out of business.

And even as you’re afraid of raising your prices, look around you and see how silly that fear really is.

Look at real estate prices. Or prices on Ebay. Or the share market. In every case, the prices are not just going up, but the price rise is actually being announced.

Don’t hide your price rise under a bushel

First, you need to know that you can quite easily increase prices by about 10% without customers complaining, or leaving in droves. Only price-sensitive customers will leave.

Incidentally, price-sensitive customers are also the most painful to deal with. So let’s just assume you’re actually going to increase your prices by 10%.

When you decide to increase your prices, don’t be a scaredy cat. Make a big deal about price rises. Announce that your prices are going to rise. And here are three specific reasons why you’ll end up a winner.

Reason 1: Announcement of rising prices causes an urgency factor

Even the laziest, most reluctant customer starts to act ‘rapidement’, when faced with an almost definite loss. An announcement of rising prices, is like lighting a fire under the customer’s you-know-what, and forces the customer to take a decision immediately, or face the consequences.

Our brains are embedded with a need for gain, and to avoid loss. So as customers, we shake off our laziness and procrastination, to make sure we get more bang for our buck.

Reason 2: Your Products/Services Increase In Value

You remember what your mama told you: You get what you pay for. And somehow, those words have percolated deep into our brains. So as customers, we associate higher prices with better quality. When we buy products, we assume that the more expensive product will be superior than the cheaper product.

When we buy services, we presume that the supplier of the services is superior (and has plenty of business) if they’re able to charge more.

Reason 3: Price Rises Gives You A Reason To Contact Customers

In most cases, you have little or no news to give your customer. Well, a price rise is prettttty big news. It has urgency, flavour and packs a lot of attention. Existing customers (and even prospects) are more receptive to an announcement of a price rise.

Because in effect, you’re looking after the interests of the customer, and saving them time, money and frustration.

Remember, it’s the announcement that counts … not the price rise itself!

The price rise is ho-hum. The announcement is really what counts. Even if you’re dealing with generic products, you can justify higher prices by using the yes-yes factor.

If you’re dealing with services, you’ve got to bundle your offer, and then increase the prices (Eg: Training events where the prices go up after the early bird offer)

If you don’t believe that announcements of price rises work, watch when people buy stuff on Ebay; or airplane tickets; or shares or real estate.

Or for that matter…petrol :)


Why Roger Does No Networking: The Power of Recurring Payments

Right outside my front door is a guy called Roger. And Roger has almost zero-cash flow problems.

He also happens to have no need to go to networking meetings

And no need to do any advertising or marketing whatsoever.

You see, Roger mows the lawns. And he’s got a revenue-generating system that most businesses never seem to wrap their heads around.

Netflix.com has the very same system

If you own a DVD player, and you need to feed the machine’s insatiable appetite, you’ll quickly find an ‘all-you-can-eat’ DVD supply at Netflix.com.

All you have to do is pay your fixed subscription fee, and you know the rest. You’ll get DVDs delivered to your home. And picked up from your home. Yeah, without lifting a finger. But in case you missed the point, there’s a remarkable similarity between Roger and Netflix.com. Yes, we both know what it’s called. It’s called the recurring monthly fee.

Your telephone company does it.
Your insurance company does it.
Your local council taxes do it.
Netflix does it.
Roger does it.
So why don’t you?

Recurring payments don’t work in your business, right?

Right. And recurring payments don’t work in the movie business too. No, not the Netflix business–The movie business. As in, ‘We’re all off to the movies, with our popcorn and our ice-cream cones.’ When was the last time you went to the movies like clockwork? You never have, right?

Well, the guys who run the cinemas know that, so guess what they offer you? Yes, the 10 Movie pass. Suddenly, you’ve bought up movies for the whole year. Suddenly you’re eating way more popcorn than you’d bargained for. Suddenly the pelting rain outside doesn’t seem to make such a big difference, because hey, you’ve got a ‘f-reeeee’ movie pass.

And the same concept applies to a web designer, or a restaurant or a barber, or whether you sell products or service. In fact, recurring payments are more than just a gimmick. It’s a system that creates multiple levels of marketing and consumption for your business.

So how does the system work?

Let’s say you run a restaurant. Now a customer who likes your food, is likely to come back many, many times. So why not sell the customer a ‘restaurant pass?’ Out of the blue, the customer will suddenly make your restaurant her favourite. She’ll be dining there at your restaurant; treating friends and clients. Now, now, slow down and notice what’s really happening, and what the client is doing for you.

1) Creating cash-flow for your business in advance: The customer is paying through a recurring system. This means the money sits in your account on a pre-arranged date. No more running around like a headless chicken to get payments.

2) Creating consumption: The law of consumption roughly guesses that if you sit in the same seat twice, you’re more than likely to sit in the same seat thrice. And then make the seat your favourite seat. The same law applies to eating out. The more a client eats at the restaurant, the more likely they are to repeat the action.

In order to take full advantage of the restaurant-pass, they’re now eating more often at your restaurant than most others. While they’re eating, they’ve become more comfortable with the staff; with the menu; with the ambience. And yes, got into the habit of consumption. Even if the customer cancelled their recurring payments, they’d still be more likely to visit your specific restaurant, than any other.

3) Creating referrals: Because the customer has got these so-called ‘pre-paid’ meals (and are more comfortable with your restaurant) are more likely to bring friends and clients along. You don’t want me to spell it out to you, do you? Ok, ok I will. Yes, you sell the friends and clients, the same ‘restaurant pass’. And now everyone and their dog, seems to have your ‘restaurant pass’.

Doesn’t this set you up for chaos?

What if everyone decides to eat there all at once? Um, you weren’t paying attention. Have you ever seen an overbooked cinema hall? Oui, once your restaurant gets too popular, you work out reservations. This kicks in one more psychological factor. Now, not only are you getting a nice bucketload of payments; not only are you creating consumption; not only creating automatic referrals, but also creating a factor of want.

If the customers don’t reserve, they may not get seats.
Suddenly that darned seat which no one is sitting on, is the most coveted space of real-estate in your city.

But what if you’re a web-designer or sell products? Surely this doesn’t apply to you, right?

Let’s see…

Web Designer: Does your client need upgrades and information on tracking, search engine optimisation, etc., at least thrice a year?
Arborist: Do the trees grow back? Silly question, eh?
iPod Dealer: Does the iPod worshipper not want another acccessory? And can’t you sell this person a year-long accessory pass?
Consultant: Can you not do a quarterly ‘warrant of fitness’ for your customer?
Dentist: Do you actually believe your customer is going to come back in 6 months for a check up?
Information Products: Can you not sell a series of educational systems? Or have a membership site of sorts?
Hairdresser: My blonde hair is turning black. My black hair is turning grey. I need a new look. I need a haircut, yada, yada, yada.

Oooh, so you’re getting the idea, aren’t you?

Well, one more thing, and I’m out of here. You know pretty darned well how value-conscious your customers are. They aren’t going to pay you the pesos, unless you give them value. Well, here’s how you create value. Give them a bonus. Or a deal. Try not to give discounts. Try to give them a bonus instead.

So if I were to plonk you back as the restaurant owner, you’d be giving your clients four extra meals, for instance.

Don’t give them a $50 discount. This is because the four extra meals will cost you less than $10. But the perception value is still well over $50. As far as possible, avoid the discounts, and give bonuses instead.

So the next time you hear the sound of a lawn-mower, you’re not hearing the sound of a lawn-mower. It’s the ‘chweet’ sound of recurring payments.

Listen carefully. And do something about it.

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How To Make A Godfather-Offer

I’ve never actually seen ‘The Godfather’.
Or read the book.

I know, I know, I haven’t lived. :)

But I’ve lived long enough to understand the concept of a Godfather-offer.

Namely: To make a offer that simply cannot be refused.

Cannot be refused?

Does such an offer exist?

Yes, it does, but only once you become the Godfather, capite?

But that doesn’t mean you can’t ‘play’ Godfather for now, and still get great results.

So how do you play Godfather?

Let’s vamoose to Karen’s company in downtown Auckland. One Wednesday, Karen made her Godfather-offer.

She offered her clients the chance for a free massage. And gave the clients the option to come in on Friday or Saturday.

To qualify for the massage (which was being given by trainees), you had to email back at lightning speed.

First come, first serve, it said. You snooze, you lose.

I lost!

I didn’t see the Godfather-offer till at least an hour later after it was sent.

Of course, since it was so powerful and F-R-R-E-E-E, I decided to take my chances anyway.

“Too late!” I was told. I’d missed out on the chance to get the complimentary massage.

“Darn!”, I thought to myself.

But the ‘darn’ word didn’t stay in my mind…

Not for long, at least. Because Karen did a really smart thing.

She did a semi-Godfather.

In effect, her email said, “If you missed the first offer, please don’t be mad. Since the free massages are booked, here’s another offer. Pay for one. Get one free. And you’ve got two weeks to make up your mind.”

Now the part that’s really vital, was that Karen didn’t email this offer to everyone, but only to those who’d shown interest in the first place. Only to those who’d emailed back.

Kaboom! Karen’s follow-up email triggered an instant response

The Godfather effect kicked in yet again. And Karen was getting bookings right away. Customers, like moi, who’d not done the massage-thing for months, were now showing up like bears after a long hibernation.

So how do you get customers out of their hibernation?

You make a Godfather offer. And you take the steps below to make the offer work.

1) The Godfather-offer needs to be a bonus, not a discount.
2) The Godfather-offer needs to be extremely compelling.
3) The Godfather-offer needs to have a clear deadline.
4) Plus one little added factor that will make the offer more effective than ever before. (Read on!)

1) Bonus vs. Discount:

Wasn’t Karen giving a discount when she offered a free massage?
No she wasn’t.

You see, there was a solid reasoning behind it.

There were trainees at stake. So if you can justify why you’re giving something free, you’re going to have customers swarming all over you.

But surely the one-paid-one-free was a discount…

It’s a matter of semantics, but strictly speaking, when you offer 50% off anything, you’re actually discounting.

And discounting means that you’re devaluing the product. A client who buys at 50%, will expect to receive the product/service at the same discounted rate in the future.

But a bonus: Namely that of one-paid-one-free is an add-on. A bonus is a gift. In tests conducted, customers put a much higher value on when bonuses were offered, even when it was more than apparent that the offer value was exactly the same. (Don’t trust me or the tests. Try it out for yourself).

2) Is your offer compelling?:

If the product/service you’re offering as a bonus is a throwaway, it will not be snapped up at all.

In the Godfather, if you didn’t do what you were told, you’d be dead, dead, dead. That’s a compelling offer, eh?

You need to offer your clients a report, a system, an audio that would make them a considerable amount of money, get more customers or increase efficiency!

If you make some wimpy offer, you’re going to get a wimpy response, or none at all.

3) Zee deadline is everything

If there’s no urgency, the best offer in the world goes kaput.

There’s no need to act, react or do anything for that matter.
So be very clear to put a deadline. And put a date.

Two weeks is a vague deadline.
April 15, 2006 is a clear deadline.

4) It’s time to roll out the Godfather offer, Signori e signore!

And before you start rolling out the offer, make sure you have at least 2-3 follow ups in place. While Karen’s comeback offer of one-paid-one-free is outstanding, it doesn’t mean that I’ve signed up yet.

And I may or may not.

Because while her offer is Godfather-like, Karen is not the Godfather. Which means her business is not top of mind. To make it top of mind, she needs to remind me at least twice before the deadline rolls along.

And finally on the day itself she needs to tell me that the offer is going to expire. As in die. L’estremita.

And that’s when my brain will kick in, and take up the offer.

Because as Don Corleone in the Godfather would suggest:
It’s just too hard to refuse.

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How To Avoid Under-Quoting On Your Next Project

You know the story of Goldilocks and the Three Bears, don’t you?

The one where Goldilocks entered the bear’s house, and ate the porridge.

And the porridge in the first bowl was too hot.

The porridge in the second bowl was too cold.

The porridge in the third bowl was just right.

Now if only your quotes for a project were just right, eh!

When you start quoting for a project, you have no idea what hurdles you’ll run into. Will the job have hidden time-suckers? Will the client want change, after change, after change…after change? Will you quote for fifty hours, and end up spending eighty? How on earth can you get a quote not too hot, or too cold, but just right?

Tell your client she can save 30% of her bill…

When you say the word ‘save’, the client’s instantly at attention. She’ll sure as hell want to know what she needs to do to save mucho pesos on the project. Tell her, that you estimate the project will take x. no of hours. And that if the project is done within those hours, the client can save 30% of the bill.

Of course, there are conditions…

The conditions are:

1) The client can’t surprise you with stuff along the way. All the resources need to be worked out before the job begins. This is to avoid scrambling and chasing people once the job begins.

2) The more changes you have to make (for whatever reason), the more time is used up, thereby reducing the amount the client can save.

3) The less back-and-forth merry go-around you have between the client; the fewer meetings etc., the less the eventual bill is going to be.

Now yes, we know you’ve quoted 30% more than any one else

And that’s good. Because despite what you believe, most clients like to get the best service—not the crappiest. We all like to buy the best cars, best clothes, and best equipment. And the more expensive the product, the more we attach value to it.

But I digress…

So yes, you’ve now got the client focused on saving the 30%

Which means they’re going to stop being underfoot; stop having long rambling meetings; stop making squillions of changes—and let you get on with zee job instead. And that’s what you want, anyway.

I know it sounds too simple…

It is simple. And just because it’s simple, doesn’t mean it doesn’t work. But you can’t just slap on a 30% premium on a quote and expect the client to be all nice and cheery about it. The client, in many a case, will have got a few other quotes as well.

And those quotes may be higher or lower

Understand one thing. It’s close to impossible to get the exact, same quote from all suppliers. Each one does a project in a completely different manner. And the quotes are going to be all over the place, depending on how the suppliers see themselves.

One supplier may be well known, and charge a premium for her fame. One supplier may be just starting out, and charge too little.

So let’s take an example or two

Let’s suppose you’re supplying coffee mugs with a logo to the client. Will every quote be the same? No, it depends. It depends on the quality of the print, the quality of the mugs, the speed of the delivery, and lots more.

Suppose you’re designing a website. Will every quote be the same? Nope. Never. It all depends on the value the web-designer is going to put into the design and construction.

So hey, it boils down to one thing…

Because just slapping on 30% ain’t going to take you anywhere. You need to justify it with tons of value. If you don’t have a list of benefits and bonuses—and more importantly—don’t let the client know, then you’ve already placed yourself in the price game, where the client chooses specifically on price.

You can think about it, or use the strategy right away

Put this simple pricing strategy into play when quoting for your next project. And you’ll not only get a very co-operative client, but also won’t have to stay up nights wondering about a cost overrun.

Or to put it another way…like Goldilocks, your porridge will be just right!

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Does Snob Appeal Sell More Products and Services?


Would a customer buy a product just to brag?
Would they pay more just to say: “I paid more?”
What if you sold something that wasn’t something spiffy like a diamond?
What if you sold a bed, or teacups, or tiles? What if you sold a training course instead?

In any business the price can be quite touchy. It doesn’t seem to make sense that higher prices would sell a product/service better.

So most of us adopt a low price strategy.

But there are some businesses that aren’t necessarily low priced. e.g. Christie’s, New York. People go in expecting to pay a higher. This is because the product is rarely being bought for utility value. It’s being bought for snob appeal.

A $2000 Mercedes or Lexus isn’t a good thing. It’s a bad thing. If you buy a $75,000 car, it’s a good thing, if you’re in the snob or collector’s game. The price is directly proportional to sales.

We’ve tried this very successfully in non-pricey goods (or should I say “utility” goods).
So let’s say you’re selling a bed. And I walk into the bed store. And you have some idea what a bed would cost, but hey you have a budget etc. And I say: Would you like to buy the $1000 bed or the $5000 bed? Now the shock is palpable to you as a customer. What? $5000 for a bed? So how do you react?

Amazingly the question changes. The customer now says: What does the $5000 bed have? And now you have the permission to describe what makes a bed $5000 vs. $1000. The value isn’t snob appeal at all. There’s a marked difference.

So do they buy the $5000 bed?
In some cases, yes. In most cases they go to $3000 or slightly below or slightly above. But how many go to the $1000? Almost no one does. Why would you purposely buy the ‘crappiest’ option?

Of course a lot depends on your sales pitch. If you educate the customer then it works to mutual advantage. If you simply “sell, sell, sell” it won’t work, because the customer senses the sales pitch. And this isn’t restricted to beds.

You can buy a knife.
I can buy a knife.
Actually you can buy a knife set for about $50-$200.
And you can get the knife block with the knife set too.

Maybe they’ll even throw in a honing steel to hone your knife.
And my knife alone costs $200. A single knife. Imagine that.
Am I insane? Why buy a knife for $200, when I can get a whole set for $50?

You may think I’m insane, but I’ve seen chefs with $4000 hand-crafted knives.
It’s rumoured that Iron Chef Masaharu Morimoto never enters the kitchen stadium without his custom-made Japanese knives that are priced between $4000 and $5000 each. That makes my $200 knife look like some junk, doesn’t it?

And is it possible that Masahuru Morimoto slices and dices the avocado better than I do? It’s possible, but is it 20 times better? That’s possible too. But eventually it’s also a matter of pride and snob appeal.

It doesn’t matter whether you’re selling beds, knives, fireplaces or a training course
We have a training course in Article Writing, for instance. I positioned it as the ‘most expensive article-writing’ course in the world. A lot of the clients who do the course are small business owners. They have limited resources, and snob appeal doesn’t quite um, appeal.

They wouldn’t be likely to do a course simply because it’s the most expensive. And yet it gets attention just like the bed did. The question changes from: “Show me what you have to offer” to “Why is your course the most expensive in the world?” And that gives you the permission to respond to the question.

Responding to the question is what’s important
You can’t do a sales pitch. You have to educate me. You have to tell me why I should buy this vs. that. An informed customer is a happier customer. I can tell you that I’m happier with my $200 knife than I would be with my $50 knife set+knife block+honing steel. I am because I know the difference between the two.

I’ve done my research. I’ve been educated and so I feel empowered. Is there a bit of snob appeal in me touting my $200 knife? Of course there is. It’s likely that you don’t own a $200 knife. So now if you’re keen to find out what makes a $200 knife better. Your customer is keen to know the difference.

But do you have to display prices to get the question?
Not necessarily. In some cases you can. In other cases you may show just a range. If the sale is offline, there’s a chunky opportunity to steer a customer to see what you want them to see. In an online situation, a similar course of action is possible.

With the right steps, the client will follow you through the sales sequence as you demonstrate what makes a better bed, or a better fire place, or a better course. But again, let’s not forget. You’re not selling the product/service. You’re describing what’s outstanding, what’s just ok, and what’s totally crappy. This sequence of education is helping the customer decide.

And how do you know if this technique works?
How do you know it won’t bomb and leave you penniless? Try it. Try it face to face with a potential customer. But don’t make the dumb mistake most sales people do. Don’t go trying to sell the product. Instead educate yourself in great detail about your premium products, your mid range product and the cheapest, crappiest product of all.

You don’t need to understand all the brands and all the prices. You just need to know the three brands/products/services you’re going to talk about (at best). Then educate the customer—don’t sell them your product.

Tell them what makes the products/services better and what makes it worse. In effect, you’re playing devil’s advocate with your own products/services. Playing one against the other, while educating the customer.

Apple does this all day long
Look at how Apple sells their products that fly off the shelf. Sure there’s snob appeal. I have an iPad and you don’t have one. But why have a lower priced iPad? Is it to capture the lower end of the market? Sure there’s some of that involved, but think about it.

Which model of the iPad do you want? The lower priced one or the more expensive one? Notice how much trouble Apple goes into to explain almost insignificant features of the product in amazing detail. It’s done for a reason. It educates you and makes you want the product even more.

You may not be Apple. You may never aspire to be Apple, but that doesn’t mean you can’t aspire to understand and replay their powerful marketing tactics and pricing strategies.

Customers say they buy on price. But they rarely buy on price alone. There are so many other factors that come into play.

One of these factors is sheer excellence of the product.
The other is understanding what makes the product superior. And of course, there’s snob appeal. If you’re selling to an audience that understands excellence and snob appeal, don’t start with your cheapest prices.

Start at the top.
It gives your customer the best possible product.

It also gives them bragging rights.

P.S. Is our Article-Writing Course the most expensive in the world? We certainly think so. And you’ll know why when you see the results and the testimonials. And nope, it’s definitely not snob appeal.

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The Logical Case For Increasing Your Prices


Let’s do something really, really stupid.
Let’s avoid increasing your prices. Let’s actually decrease them.
By a whole 50%.

So instead of earning $50 per hour, you actually start earning a measly $25.Then just for good measure, let’s reduce your prices by another 50% to $12.50 an hour.

And now let’s do some calculations, shall we?

When you worked at $50 per hour, you earned enough each month to afford a pretty decent lifestyle (even though you’re kinda slogging out that forty-fifty hour week)

But notice what happens when you drop your prices in half

Now you’ve got to work a hundred-hour week, just to be where you were earlier.

If you drop your prices by another 50%, you’ve now got to work a two-hundred-hour week–just to maintain your earlier lifestyle.

And of course, you can’t see the point of this article, right?

Oui, as you’d expect, there is a point. A very valid point. In fact it’s a case: A case for increasing your prices.

But let’s continue to do something stupid: Let’s wallow in the low-price scenario for a while, and see the consequences of lower pricing.

We already know if you reduce your prices by just 50%, you now have to work twice as hard. But twice as hard, means you’re twice-as -tired. More tired, means you’re slogging your you-know-what off, just to stay in place.

Or if you sell products instead of services, you’ve got to reduce the quality of your ingredients. You’ve got to put in cheaper, el crappo ingredients.

And the repercussions are worse than just tiredness. Or sub-standard products. The biggest repercussion is the loss in value that you bring to the customer.

Because stop for a second, and think about it.

Think about what your customer really wants:

Let’s assume you make bread. As in Pita bread. Like Danny’s Pita Bread that you’ll find in a local supermarket in New Zealand. (And yes, I’m a fan of their bread)

You’ll find that while there’s a fair bit of ‘discount bread’ around, Danny’s Pita is not available at a discount.

The logic is simple. To create tasty bread, you’ve got to use higher quality ingredients.

And if you don’t want to reduce your profits, and are already running a cost-effective business, then as a manufacturer, you have to pay for better-quality ingredients.

Ergo: The bread costs more. But tastes better. Or would you prefer cheaper pita bread that tastes like cardboard?

It’s no different if you sell services instead of products.

Let’s assume you’re assigned to create a website for a customer.

Does that customer want you to charge $2000 for the website? Or $5000? Sounds like a silly question, but it’s not. The answer depends on the value you bring. And how much you educate the customer on that value.

So if you charge $2000, and the website enables the customer to bring in profits of $5000, then you’re doing fine. But what if you charged $5000, and the customer could bring in profits of $20,000?

Which option would the customer choose? The $2000 fee? Or the $5000 fee?

Again, silly question.

A question that kabooms you right back to lower prices.

When you charge lower prices, you work twice as hard. That we know for a fact.

But you also have no time to learn. You certainly don’t have the money to spend on the books, superior equipment, better advice etc.

And you know as well as I do, that the most effective tools and systems are often the most expensive.

So you plod on.

You do only what’s expected from you. You overwork your frazzled brain. You create yucky, sub-standard products.

And the spiral whizzes downwards.
You learn less. You bring less value to customers. You earn less.

So what’s the key to earning more?

The key is in understanding that your customer ain’t interested in your fee. Your customer is only interested in value. As long as you can demonstrate the value, your customer is always going to choose you over the competition.

What’s really important is that you educate your customer on the difference in value (Value is not always perceptible).

But won’t increasing prices, reduce profits?

Won’t you drive away your customers in hordes? Let’s take a few examples and see, shall we?

If you go to the supermarket, and the price of your brand of bread at $3, has gone up by 10% to $3.30, will you scream in angst?

If you go to a workshop and last year’s price was $500, and this year’s price is $550–will you not go?

If you need roofing, and the better roofing costs 10% more, but lasts longer, will you buy the cheaper roof?

Of course, there are price-conscious customers

And for every price-conscious customer, there is a value-driven customer.

So yes, you’ll lose the customers who’re on a tight budget. But simultaneously, the number of value-driven customers won’t vamoose to your competition’s business.

This of course brings us to one of the lamest excuses for increasing prices. The reason why most businesses say they don’t like to increase their prices, is because they don’t want to over-charge customers.

Well, if you’re so afraid you’re overcharging, why not undercharge? Why not reduce your prices by 50% instead? Double or treble your workload instead. Learn less. Earn less. Bring less value. And go out of business.

Hmmm…raising prices doesn’t look so stupid after all, does it?

Next Step: Want to learn more about pricing? Find the entire pricing strategy series in text, audio with cartoons!
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