Pricing Strategies – Chris Cardell
In a study by psychologists, it was found people value the things they acquire if they’ve had to put some work in to get them.
In other words, we don’t really value things that come to us too easily. And the flip side of this is the things we have worked for, we do tend to value.
This might not be the most startling revelation you ever had, because we can all relate, I’m sure, to the satisfaction of a well earned something or other.
But what might be surprising is this also applies to sales and, especially, selling at a premium. Everyone likes to feel exclusive, and this is true of the things we own, too — there’s a certain pleasure to be had in owning something no one else or few others can have.
This is why a “limited edition” of virtually anything is pretty much guaranteed not only to be popular, but also to be selling at a premium.
That’s really classic scarcity at work, if you think about it. And here’s where it gets almost too good to be true: not only will people pay a premium for exclusivity, but they’ll work like hell to get it, too.
And you can very easily get this to the point where you have your customers and clients “jumping through hoops” to earn the privilege of paying your premium prices.
I’ll give you a few examples to prove my point. First, there’s a famous (in his own circles) copywriter named Gary Bencivenga. He’s reckoned as being one of the best ever, but he’s now retired.
And for his retirement “do” he held what he called the “100 Seminar”, because only 100 places at it were available.
But he recorded it and turned it into a handsome and glossy bound manual with a set of the DVDs.
And he sells it for $5,000, as a limited edition with only 2,000 ever to be sold. But you can’t just go online and buy this set.
No, first, you have to fill out a “non disclosure agreement” and then fax it back to him along with an Application. If he accepts it, you then have to Fedex him a cashier’s cheque for $5,000 or do a wire transfer.
Then, and only then, do you get the manual and DVDs sent to you. Sounds absurd: people jumping through hoops to pay $5,000 for one book and a few DVDs.
But they do it, and owning a copy of the “100 Seminar” recordings is like a badge of honour in the copywriting community.
A second example is owning a franchise of a company in California (this goes back some years and I can’t remember the name of it).
The franchise itself was over $250,000 which is a lot of money even now — back then it was an enormous sum. But you couldn’t just buy your way in, which is the way with most franchises.
First, you had to fill out a form and send it off with a fee. Then you had to fly to California and undergo a “discovery day”, which you also had to pay for.
If you got through that successfully, you had to go to California again for an interview. And then you went away again.
After a few days you’d be told if you were successful or not and would be allowed to put down your $250,000 for the franchise. There is no reason at all for you not to use this kind of thinking in your business.
The details will be different, of course, but the principle of not letting people buy “just because” is a powerful one, and one way to ensure your prices are in the premium range.