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Want To Help Your Customers? Charge More. And Lie To Them.

by TimGross
30 replies
I'm sure you've heard of "The Placebo Effect"... The example normally used is that if someone in pain is given a sugar pill while being told it's a strong pain killer, a large portion of people will report feeling less pain after taking the placebo.

The book "Predictably Irrational" (worth reading) goes a step farther, by testing how the cost of the placebo effects the perceived results:

The conclusions of the researcher's tests:

1) When given the energy drink "Sobe Adrenaline Rush", people who paid full price for it and then worked out reported feeling less fatigue afterwards than those who paid only 1/3 of the full price.

In other words: The product helped the consumers more when it cost more.

2) In a second test, some purchasers of Sobe Adrenaline Rush were lied to and told that the drink improved mental functioning, being quoted 50 (fake) scientific tests that "proved" it.

In the experiment, after consuming the beverage, purchasers had to answer a quiz to test their mental functioning.

There were 4 groups tested, here were the results:

1) Didn't drink Sobe and answered the quiz (to establish a baseline)

2) Did drink Sobe but weren't lied to about it making them smarter (performed the same as group 1)

3) Lied to about Sobe making you smarter and purchased the drink for 1/3 of the regular price (Performed better than group 1 & 2)

4) Lied to about Sobe making you smarter and purchased the drink at full price (Performed five times times better than group 3 on the test, which was already better than group 1 and 2)

The results are inescapable: The more you lie to your customers and the more you charge them for your products, the better your products will perform for your customers.

Which brings up an ethical dilemma: If lying about a benefit of a product actually causes the benefit to exist out of thin air, is it lying?
#charge #customers #lie #placebo effect
  • Profile picture of the author notoriousstef1
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    • Profile picture of the author Siko
      This is a very interesting post right here! And this was always the truth! Those who pay more, are more happy with their product and those who pay less or nothing are always expecting more in return!
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  • Profile picture of the author Andy1750
    It is morally wrong as it is lying. Any claims about a product should be based on the results from using the product WITHOUT seeing the claim. The former is called a blinded study and is common practice in registration of products such as medicines. Both of the studies highlighted above indicate that that the claim can influence the efficacy of a product. However, as the original claim should be based on the blinded efficacy of the product to state that a product works without this evidence is an outright lie.

    Lying is unfortunately common place in this business. In fact I would doubt there is a single sales letter out there for an internet marketing product without one lie or another.

    The world of internet marketing needs to be cleaned up and I would strongly support any efforts (regulatory or otherwise) to do so. No money should EVER be made based on lies.

    Andy
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    • Profile picture of the author TimGross
      So... You don't want me to sell you this Tic Tac that will let you live forever even if it successfully turns you into a Highlander? (heh)

      There is one catch though, I have to charge you a million dollars for the Tic Tac in order for it to work, according to the study. I'm willing to negotiate a sensible payment plan for you. (No, NOT a dollar a year for the next million years. Just because you're immortal doesn't mean that I am.)

      Originally Posted by Andy1750 View Post

      It is morally wrong as it is lying. Any claims about a product should be based on the results from using the product WITHOUT seeing the claim. The former is called a blinded study and is common practice in registration of products such as medicines. Both of the studies highlighted above indicate that that the claim can influence the efficacy of a product. However, as the original claim should be based on the blinded efficacy of the product to state that a product works without this evidence is an outright lie.

      Lying is unfortunately common place in this business. In fact I would doubt there is a single sales letter out there for an internet marketing product without one lie or another.

      The world of internet marketing needs to be cleaned up and I would strongly support any efforts (regulatory or otherwise) to do so. No money should EVER be made based on lies.

      Andy
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      • Profile picture of the author Andy1750
        Originally Posted by TimGross View Post

        So... You don't want me to sell you this Tic Tac that will let you live forever even if it successfully turns you into a Highlander? (heh)

        There is one catch though, I have to charge you a million dollars for the Tic Tac in order for it to work, according to the study. I'm willing to negotiate a sensible payment plan for you. (No, NOT a dollar a year for the next million years. Just because you're immortal doesn't mean that I am.)
        I would want to see the evidence, and a well designed study would prove that you are talking nonsense.

        Andy
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        • Profile picture of the author TimGross
          Originally Posted by Andy1750 View Post

          I would want to see the evidence, and a well designed study would prove that you are talking nonsense.
          Andy
          I've got another guy interested in the Tic Tac and I've only got one left. I don't want to rush you, but if you're interested let me know. I do have a Certs too, but it's only good for a few hundred years.
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          • Profile picture of the author Andy1750
            Originally Posted by TimGross View Post

            I've got another guy interested in the Tic Tac and I've only got one left. I don't want to rush you, but if you're interested let me know. I do have a Certs too, but it's only good for a few hundred years.
            I would ask to you explain how you know. Unless you are able to give me an evidence based reason I would walk away.

            Andy
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            • Profile picture of the author TimGross
              Originally Posted by Andy1750 View Post

              I would ask to you explain how you know. Unless you are able to give me an evidence based reason I would walk away.
              Andy
              Tell you what, I've got a magical Klondike Bar that automatically gives you a sense of humor. It normally sells for $1,000, but I'm going to give it to you free. Just give me your mailing address and you'll get it in a few days. ...Maybe you should refrain from posting until then.
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              • Profile picture of the author Andy1750
                Originally Posted by TimGross View Post

                Tell you what, I've got a magical Klondike Bar that automatically gives you a sense of humor. It normally sells for $1,000, but I'm going to give it to you free. Just give me your mailing address and you'll get it in a few days. ...Maybe you should refrain from posting until then.
                It seemed like an intelligent post that deserved an intelligent answer.

                If it was intended to be humorous then I think that you need some Klondike Bar more than me!

                Andy
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                • Profile picture of the author TimGross
                  Originally Posted by Andy1750 View Post

                  If it was intended to be humorous then I think that you need some Klondike Bar more than me!
                  Andy
                  Heh, fair enough. :-) I didn't mean to get into a back-and-forth with you... For the record, I do not condone misleading customers and potential customers in any way.

                  Good copywriters need to be students of psychology, because understanding what goes into prospect's decision-making process is crucial to do the job correctly. This experiment showed how strong the power of suggestion is, and how price influences the perception of quality.

                  ShawnC had a very good point in his post when he said, "In the Sobe instance - they either paid 1/3rd the price or Full price. So basically, they were never OVER-charged."

                  ...So in reality the experiment was never about ripping off consumers by charging too much, it was just an experiment on price perception. In info-marketing, for instance, a huge number of buyers never even read/watch what they've purchased.

                  What could increase their readership/viewership?:

                  1) Stress while they are purchasing the product how valuable it is and how important it is.

                  2) Charge enough that they feel obligated to actually use it. At one point, Jay Abraham's book "Stealth Marketing" (which 1,000 people paid $1,000 for previously) was available to download free... (If memory serves, Paul Myers was involved with providing the downloads.)

                  I downloaded the ebook version and printed it out (why? because it was worth $1,000), and I looked through it quite a bit, but I don't think I studied every single word. I bet if I'd paid $1,000 I would have.

                  So the real ethical takeaway from my original post is that if you're not convincing your potential customers and customers of the real value that you're providing them, you're not only shorting yourself (by making less sales) but you're also hurting them (because less people will buy it and benefit from it, and of those that buy it, less of them will be motivated to actually use it.)
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    • Profile picture of the author Kay King
      If lying about a benefit of a product actually causes the benefit to exist out of thin air, is it lying?
      I don't think it's that convoluted. If YOU know that what you claim isn't true, you know you're lying.

      So the only question that remains is whether you are willing to lie to make money....or not.

      Pretty simple when you look at it that way.

      kay
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  • Profile picture of the author ShawnC
    Very interesting indeed - I think it'd be wrong to lie but I think it's okay to charge more if the value is already there.

    In the Sobe instance - they either paid 1/3rd the price of Full price. So basically, they were never OVER-charged.

    So going in the same vein - if you charge what it's WORTH and what that worht will actually feel like to a person, then that is totally okay.

    I'm doing an experiment right now on a small product. Priced at 2.97, 4.97 and 9.97. The 9.97 appears like it's going to end up being the hands down winner. Which is shocking to me. On top of that - the 9.97 customers have given more positive feedback (vs. when I had it for free or the 2.97 i got NO feedback).

    Certainly seems to hold true - the greater the cost, the higher the value. It's sad that Price = Value but it's true.

    Thanks for this post Tim.
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  • Profile picture of the author Matt Gannon
    Same thing goes with restaurants, if there is a fancy menu and higher price, they enjoy the food more even know another group didn't enjoy it with a not so nice looking menu and low prices.(same exact food.)
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  • Profile picture of the author Raydal
    Originally Posted by TimGross View Post


    The results are inescapable: The more you lie to your customers and the more you charge them for your products, the better your products will perform for your customers.

    Which brings up an ethical dilemma: If lying about a benefit of a product actually causes the benefit to exist out of thin air, is it lying?
    I would venture a 'psychological' reason for the results. The more you
    pay for a product, the more you have to justify in your mind the
    decision you made and the more of a self-fulfilling prophecy the
    benefit becomes.

    When I sold books from door to door, my books were sometimes
    5 times the normal price of other books with similar physical
    properties (page count, cover etc.) and when I asked the
    sale trainer why the books were so expensive he said that
    people were more likely to read them i.e. value them.

    The books were indeed of high quality, but the price cause people
    to value them more and kept them for many years. I still have
    some of those books and the pages haven't turned brown like
    those 'low quality' books you get in the bookstore.

    And, no, it's not in my mind!

    -Ray Edwards
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    • Profile picture of the author edman
      I would agree with Ray, it's a psycological thing.

      We've carried out a price test for a fitness manual where the goal was to use this product part of an awareness campaign for a personal fitness coach.

      As we tested different price ranges, we found out that those who took the product for free, hardly looked at it and the follow up was quite low, ... many even unsubscribed.

      We got better responses at $1 price, and even better than when we gave it away for $7, as we found out after speaking to a few purchasers that they understood the $1 was more or less symbolic, and it was worth a lot more... the fact that they took the time to pay for it, was an acknowledgment that they needed the product, and were eager going to try it out. Those that got it at $7 valued it at $7 so they too didn't expect much...


      Originally Posted by Raydal View Post

      I would venture a 'psychological' reason for the results. The more you
      pay for a product, the more you have to justify in your mind the
      decision you made and the more of a self-fulfilling prophecy the
      benefit becomes.

      When I sold books from door to door, my books were sometimes
      5 times the normal price of other books with similar physical
      properties (page count, cover etc.) and when I asked the
      sale trainer why the books were so expensive he said that
      people were more likely to read them i.e. value them.

      The books were indeed of high quality, but the price cause people
      to value them more and kept them for many years. I still have
      some of those books and the pages haven't turned brown like
      those 'low quality' books you get in the bookstore.

      And, no, it's not in my mind!

      -Ray Edwards
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      • Profile picture of the author TimGross
        Originally Posted by edman View Post

        ...they understood the $1 was more or less symbolic, and it was worth a lot more... Those that got it at $7 valued it at $7 so they didn't expect too much...
        Excellent observation and analysis.

        -And for anyone else reading this, the other money quote from what you said is:

        "...after speaking to a few purchasers..."

        Too many people starting businesses online are afraid to talk to their customers. There's so much you can learn.
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  • Profile picture of the author notoriousstef1
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    • Profile picture of the author JohnMcCabe
      Tim, you raise an interesting question. I'll have to ponder on it awhile...

      Your little joust with Andy raises another question, though. How would one ever prove that something made you immortal? The study, if the premise were indeed true, could never end - by definition.
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  • Profile picture of the author ShawnC
    I feel very strongly about how people will value something based on it's cost.

    I work with an individual who has my site, and another site with someone else. That's fine really, my site outsells the other one big time. And here's why - the other one gives too much away for free.

    Instead of having a price on his 5 ebooks - he has them all being given away for free.

    Those 5 ebooks contain almost everything that is also in his Big Ticket Item. Which, if they were read would entice people to buy that Big Ticket Item because it fleshes it all out.

    Instead - they get all that AWESOME information for FREE, and then never ever touch it. A select few obviously do, but really we all know how many don't do a thing with it.

    Now - I refuse to give those ebooks away for free. And those ebooks sell on my site. And those people that bought the books - they have chosen to purchase other things. Why? Because they paid for the info, they made sure ot get something out of it.

    I firmly believe that if it's worth it, CHARGE MORE. I am so glad i'm not in the iPhone App market - people see a peice of amazing software with a pricetag of $9.99 and think it's too expensive, because they got conditioned to pay .99 cents for everything. But you can bet the people paying more, are actually using the software and giving feedback to the developer to make it better. And because the develop got paid decently, they can afford to take the time to support their product.
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    • Profile picture of the author Diane S
      Originally Posted by ShawnC View Post

      I feel very strongly about how people will value something based on it's cost.


      Now - I refuse to give those ebooks away for free. And those ebooks sell on my site. And those people that bought the books - they have chosen to purchase other things. Why? Because they paid for the info, they made sure ot get something out of it.

      I firmly believe that if it's worth it, CHARGE MORE.
      People don't appreciate free.
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      • Profile picture of the author Makabongwe Maseko
        I think raising the price of my products was one of the wisest online business decisions I've made.

        I was selling one of my niche ebooks for $7 because I know that it's recession and people don't want to spend lots of money. Ok I made sales but I got tried of opening my inbox to find $7 sales. You add that all up and it comes to nothing.

        So I decided to raise my price to $17, and "BAM" just after a few hours I made a sale. $17, 2 times more then what I was getting. Ever since that day which was last week my sales have sky rocked.

        I thank myself for raising my prices because now I'm making more money.

        After 2 weeks I'll be testing out $27 because right now I'm still enjoying my sales and don't want to stop the flow because I've got bills to pay.

        "Lesson" was don't under grade your product because that is what potential buyers will see as well. They will think that since your product is so cheap it means that it has no value then they won't buy it.

        All the best!
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  • Profile picture of the author Vikuna2009+
    Well, my tiny "contribution" to this is from past experience when I had a custom drapery workroom (excusitely marketing myself as European "old world" CUSTOM design.

    They all gobbled it up and yes, I did provide. You could have gotten a lined drapery panel for $17 but my starting price was $55. If you wanted a special header, I added more!

    I never advertised, referalls only. They were all happy (me too ) but had to close shop due to severe carpal tunnel.

    Other sales jobs throughout life has over and over proved that sometimes you need to charge more than your competitors. It's a perceived value and it still works today!

    Compare yourself to a sweatshop = get paid sweatshop prices. Make yourself exlusive = make big bucks!
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  • Profile picture of the author Allen Graves
    I think a tree just fell in the woods. But I don't know if I heard anything!
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    • Profile picture of the author Paul Myers
      Tim,
      At one point, Jay Abraham's book "Stealth Marketing" (which 1,000 people paid $1,000 for previously) was available to download free... (If memory serves, Paul Myers was involved with providing the downloads.)
      Indeed I was. That was a joint deal with Jay, and it served up a whole bunch of very interesting lessons. Some of the ones having to do with how third parties will try to hijack a good deal aren't suitable for describing in a family forum... Or even here, for that matter.

      One of the more useful marketing lessons (as opposed to methods for preventing an accumulation of third-party knife holes in the backs of my shirts) was the importance of attaching some kind of price that was other than financial. I used that to great effect in a recent campaign. I'd estimate that the freebie in that one gets used 4 or 5 times as much as most free offers. Still, it's probably only used by maybe 20% of the people who grab it.

      Personal up-front cost - of whatever kind - is an enormous factor in the value a person extracts from a product.

      For instance, a person might not perceive the value of the Klondike Bar when it's offered freely, even though the lack of a sense of humor might be creating unseen costs of a significant nature.


      Paul
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  • Profile picture of the author webgeek154
    try this on.

    if you're selling a product which would deliver a lot of value IF they consume/use it, then you're actually delivering more value just by charging more for it because by paying more, they'll value the product more and therefore will be more likely to consume it and take action on it.

    the act of raising your price creates more value for the buyer so you're not overcharging.

    - WebGeek
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  • Profile picture of the author webgeek154
    yeah, i agree with bei3371. lying is not the way to go.

    DO charge more for delivering more value, but DON'T lie.

    but i don't think Tim was suggesting you lie.
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  • Profile picture of the author ShawnC
    Tim was suggesting you Lie with Style, heh. Joking.

    Paul - I like the term 'Personal Upfront Cost' implying more than just financial. I look forward to realizing one day what other things can be that upfront cost other than price.

    BTW Paul - are you Paul J. Meyers? the man credited with this quote?
    "What ever you vividly imagine, ardently desire, sincerely believe and enthusiastically act upon must inevitably come to pass."
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    • Profile picture of the author Kevin Riley
      This is why I will not use discount coupons when we order a pizza. I'm sure the pizza will not taste as good. I don't want a pizza with 20% off flavour.
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      • Profile picture of the author TimGross
        Originally Posted by Kevin Riley View Post

        This is why I will not use discount coupons when we order a pizza. I'm sure the pizza will not taste as good. I don't want a pizza with 20% off flavour.
        A couple years ago I purposefully paid $100 for a $12.95 hat to increase my appreciation of it (seriously). It really flustered the cashier, pretty hilarious, but that's a story for another day.
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  • Profile picture of the author Matt.Lake
    Ha ha - I like you're thinking, and to a point a agree. It all comes back to the percieved value you portray when having a higher price I guess. If it costs more, then it's obviously better - and so it will obviously help more.

    Nice.
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    • Profile picture of the author Paul Myers
      Shawn,
      I look forward to realizing one day what other things can be that upfront cost other than price.
      Time, effort, public or private commitment, any action that entails a promise of some specific performance.
      are you Paul J. Meyers? the man credited with this quote?
      Nope. He's much older, if you can believe it. I'm the Paul Myers who's often credited with such quotes as, "Riley! Get these damned hamsters out of my kitchen," and "Why is that helicopter following me?"


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  • Profile picture of the author ShawnC
    Thanks for the clarification Paul - and yeah it would have kind of shocked me if you were. Though your excellent writing and demeanor it would not have surprised me.

    See, I never knew who that quote was from "Why is that helicopter following me?" - I have it on my facebook as 'anonymous' it'll be good to put a name to it.
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