- by Rory Ramsden
So here’s the problem.
Your new product launch is going well. Your prospects are responding to your pre-launch content; you are building credibility and authority. And you’re about to pivot and start talking about your offer. Now comes the tricky part. You have to pitch your price.
A large part of this is down to how you have put your offer together. The more value you can include the better. We can go into that another time but for the moment let’s just say it’s all about mining your assets and making a bundle of as much relevant content as you can and creating an overwhelming offer.
The question that is keeping you up at night is how do you actually introduce your price so that it seems super reasonable although it might actually be at the top end of the range of prices in your niche.
Before I answer your question let’s start with a fundamental
Most people don’t know what they want unless they see it in context
So let’s consider the concept of a ‘decoy price’. Something that Dan Ariely, Professor of Behavioral Economics at Duke University tested and wrote about in his book “Predictably Irrational‘
Here’s one of his examples. The ‘Economist‘ was running a subscription Ad on their website
1. Internet only subscription $59
2. Print only subscription $125
3. Print-and-Internet subscription $125
Well, as you would expect, no-one took the ‘print only subscription’; 16 took the Internet only and a full 84 took the Print-and-Internet subscription. When a different group was simply offered the choice between the two most popular without the print only subscription, what difference do you think it made?
This time 68 took the Internet option and only 32 the Print-and-Internet bundle.
So what possibly could have changed their minds… It certainly was nothing rational.
Just adding a ‘decoy price’ can therefore have a stunning effect on your bottom line and increase your profits without having to do more work!
Before we leave Dan, lets just consider one more fundamental…
“We not only tend to compare things with one another but also tend to focus on comparing things that are easily compared and avoid things that cannot be compared.”
Confused? Well, if you go back to the subscription offer that the Economist was making. It was obviously much easier to compare the two $125 dollar offers than to compare the Internet only offer with either of the above. Why, because the $125 offers are so easy to compare.
Given these two facts, you can now start to put together a pricing strategy for your new product launch.
But we still have the problem of how to make the high price point we intend to sell at seem reasonable and here we have to anchor our price to much larger numbers.
Now you’ve probably all seen salesmen ‘start high’ and ‘finish low’ when talking about the price. You may consider this is a bit ‘tacky’ and it is but what they are doing is anchoring numbers in your head so that when they finally reveal the price, it seems so good that you are tempted to buy even when you don’t really want what they have to sell.
That is the power of anchoring or framing your price although you need to be more subtle about how you do it.
Here is an example…
In the launch of PLF 3.0, Jeff Walker speaks about the million dollar launches he has been involved in then he talks about his student who is in the medicinal herbs niche and how he has grown his business from ‘food stamps to six figures’. He starts high with million dollar launches and and finishes much lower with medicinal herbs and how much a small niche is pulling in . When he finally comes to reveal the price after telling you about his overwhelming offer, the number has been anchored to a series of far larger numbers and does not appear so much.
So when you come to the last few steps before you reveal your price, here is what to do…
- First stack your offer with amazing value; \
- Second, move on to anchor your price against some much higher numbers
- And third, include the ‘price decoy’ technique to maximize your bottom line.
Now, when you are watching a sales video or indeed reading a sales letter for a new product launch, analyze the structure and notice what is going on. It will make you a better marketer and you will be able to use the techniques you like over and over again in your own launches. Remember to come back and tell me what you find by commenting below.
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- Apple’s 7-inch iPad decoy (thoughtgadgets.com)