When you're giving away bonuses, it's easy to believe you don't need to give away your best product or service.
The best information always needs to be sold—so you can earn a decent living. And yet, this podcast episode takes an opposite stance. You need to put your best stuff out in front—free.
Yes, give away the goodies, no matter whether you're in info-products or content marketing; services or running a workshop. Giving away outstanding content is the magic behind what attracts—and keeps clients.
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Re-release: How to Overcome the Myths of Pricing
“Don't go out in cold without your coat—or you'll get sick”.
Which one of us haven't heard our parents insisting on us wearing a coat? Almost every parent on the planet firmly believes that a cold is sure to descend upon you, if you don't have that coat on. And yet, you don't get colds because of the temperature outside. You get a cold from viruses—and guess what? Those viruses are more likely be indoors than anywhere else. So yeah, getting that jacket or coat on, is just a myth, but it sure keeps you warm.
In pricing we also have myths that keep us warm
And two myths prevail, causing us to lose out on charging higher prices over time. They force us to put on a coat, when it's perfectly good to go outside without one. Let's take a look and find out what these myths are, and how to overcome them.
Myth 1: Ending prices with 7 or 9 (e.g. $97 or $99 instead of $100)
Myth 2: You can feel the “right price” in your gut
Let's start with Myth 1: Prices ending in 7 (E.g. $97 or $99 instead of $100)
Back in the 70's or 80's, a marketer called Ted Nicholas is said to have suggested that prices ending with the number 7, do better than other ending digits. This means that, theoretically speaking, you'd sell more at $9.97 than $9.99. Sure, it's only two cents, but does it actually sell more product or services? The answer is that price rarely if ever depends on your magic figure.
So we decided to test the pricing on our site at Psychotactics
When we started out, way back in 2002, our prices all hovered around the $7 ending. But then we decided to test if the ending prices made any difference whatsoever. And you know where this is going, right? Yup, we ended prices with 8, or 2, or just any old figure that came to our heads. And we waited with bated breath.
And nothing happened.
The sales didn't go up, and they didn't go down
So we started putting any price endings that came to our head. One of our best-selling books (it's sold over $500,000 worth of copies) sold for $109.22. Our courses and workshops had all sorts of odd price endings and it didn't make one whit of a difference.
Yet what would you notice if you go to our website today?
If you were to do a systematic sweep, you'd find to your surprise that most of the price endings are 7, 9 or 5. So how on earth did that happen? If the price endings don't matter at all, how did we end up with such oft-repeated figures? It's a factor of laziness, really. When creating a price point, it's easy to just not have to think about the price too much at all. And so we revert back to our 7 and 9, without much thought.
So how do we overcome this first myth?
First, recognise that it's a myth. That if you're spending time wondering if you should price your product with a 5, 7 or 9, you can go right ahead. In all pricing experiments online and offline, you'll find that a mere ending rarely has any bearing on sales. Some sites like Target will hover madly around the 7 or 9, but then slip in an 8 here and there.
On equally large sites such as Expedia, the prices for an airline ticket can be $1331 or $791—or even $798 or $644.
If you head to buy houses, say in Washington DC, you'll find that houses sell at round figures of 4,500,000 or 2,750,000. If you buy movie tickets, you'll find routinely that the prices may be $12.50, $14 or some round figure with not a 9 or 7 in sight. In fact, the closer you look around at different products and services, the more you find there's no logic for a 7 or 9 to exist.
In fact, despite the widespread use of 7 or 9, scientific studies (and these are mostly retail examples) have shown the following:
– At least among US retailers (where the study was done), there is no evidence of their effectiveness.
– While the use of 9 as an ending increased demand, it was only for new items than any items sold in previous years (this suggests a novelty effect).
– That in some situations where there is a “sale” cue, the 9 ending becomes less effective.
– In cases where the retailer wants to create an impression of a sale, they price at the 7 or 9 price ending. When they sell “regular merchandise”, the prices are always rounded prices, so that customers see the products as valuable and not underpriced.
So with all this conflicting information, in which direction do we go?
Most of us in either selling a product, service or training of some kind. Training or services are bought one at a time, and after considerable evaluation of the the consultant or trainer. If you're having a workshop, no one is jumping up and down simply because you decide to put in a magical number. In fact, we have conducted The Brain Audit workshops over several years, pricing the very same workshop at $USD 1500, $NZ 1500, NZ$1499, $800, $500—and because we do workshops worldwide— € 879 or £835.
And the very same workshop, with the same content and the same speaker sells out because of the content, and not the price.
If it were the price, and especially the “so-called” magical 9 price ending, the lower prices might have triggered quicker sales (since the workshop sells out anyway). And granted it's not industrial scale testing of the pricing, but that's how most of us are—we're selling small programs, workshops, training and services. And the customer has made up their mind whether to go ahead—or not—long before they see the price, let alone the magical 7 or 9 price ending.
So what are you to do?: What's your action plan
Try it out for yourself by pushing your price up from say, $29 to $32. And all you'll be is $3 richer, every time you sell that particular product. It may sound like it's just $3, but it's a whopping 10% increase—and your customer won't even notice it. So the sooner you get off the myth of 7 or 9 pricing, the better. And if you're still fussed about sticking to 9, well, sell it as $32.99. That way you can have your 9 and your increased profit as well.
Next Pricing Article: Why Higher Prices Get More Attention Than Lower Prices
Next Step: Read our best articles on pricing.