Product pricing

The monster reference book on pricing is Strategy & Tactics of Pricing by Nagle and Holden. Every question you'll ever have about pricing is covered there, with enough information for programmers to set up a custom spreadsheet.

Here's the part that applies to you.

Start with the benefit of the product for the buyer. In your case, the benefits are: increased visibility of the business; more people arrive; can't get lost; can deliver a different message to all the traffic passing by instantly; etc.

Now, figure out how much money those benefits are worth. If x% more people arrive, y% of people don't get lost, you don't have to spend $z per thousand in the newspaper to reach people driving buy, etc. How much is that worth to the buyer's business? If they didn't do this with a sign, how else would that get that much more top of mind awareness with the public?

Next, subtract the costs of using and maintaining the sign. How much will the electricity bill increase? How long will it take to program in new messages? Can this be delegated to a low level worker or will it require management time? Will insurance rates increase so the sign can be fixed if there's a hailstorm?

Finally, figure how much of the benefit and cost is unique to your product - beyond what any old sign would provide, or other advertising alternatives.

The formula for value is:
The reference product or service that's the closest match if your product is not bought
+ the value to the customer of the unique features of what you offer
- the cost to the customer of operating what you offer

Now, your salesmanship will determine how well you can communicate these benefits and extract the full value provided by the sign.

In terms of Internet marketing, you're limited by geographic reach of sign installers. Perhaps you'd do better to have a regional network of exclusive territories?

Regards,
Allen

Thank you for your answer, Allen, but the pricing isn't the question. My pricing is pretty much set by my supplier. And I'm only selling, not installing. If the customer can't determine how to hang a sign in his front window, then he shouldn't be buying a sign. I do know where you are coming from, however.

My question is this: Are the internet marketing techniques I need to use to sell a $4000 product going to be the same techniques I use to sell my $17 "blue spinning widget" report? I suspect the answer is no, you need to use different techniques. But that's only a feeling. If there are, in fact, different techniques, I'm looking for some specific examples...
Again, my thanks in advance....

Armadillo,

are you the exclusive dealer for this device - or do others sell it too? And if not exclusive, do you have the right to sell it on lline or just within a specific territory? The answers will affect how you market the device via IM techniques, which are basically direct response techniques.

I know at the national lab where I worked the investigators purchased devices from direct response ads/letters/catalogs etc all the time. I also remember reading of a scientist who sold a 10,000 special drill to researchers and sold everyone he could build - even when others said it was impossible, all via mail order.

So the basic answer is yes, you can sell it online. The question is what extras do you supply the user for doing so? If you're not an exclusive dealer then you could quickly get into a price war if your manufacturer allows it (which some will try to enforce though there are some recent lawsuits that disallow them from setting prices) - which doesn't help anyone.

Allen had some great points in his post - so take them to heart as you investigate how to market, just remember to pitch benefits and not features or price.

At your price point you may want to concentrate at first on getting qualified leads to follow up with. We do this with our product - a 150K software package. At that price point you just don't sell it via clickbank ;-) . But we can, and do, generate qualified leads using IM techniques like PPC, PR, and email marketing.

Which technique will work for you and your product will depend on several things - but there's nothing inherent in IM that precludes you from doing so.

good luck,
--Jack

C'mon, Jack, there's plenty of room in there to pay the affiliates well!

Aha, thank you for clarifying the question.

Could you list some of the techniques you're using for the $17 sale?
And what is the current marketing/sales process for in person, brick & mortar sales of the sign installations?

Regards,
Allen