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After listening to an audio clip of Tony Robins interviewing Frank Kern. Frank Kern goes on to say that he prices his products at 8-10 times the cost the product takes to make i.e if the product costs $50 to make he sells it for $400 minimum. Going on to say that you can get it if you just ask for it and it means you don't have to sell as much stuff.

Is this an ethical way of pricing? Why?
#ethics #pricing
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  • Profile picture of the author Kay King
    Why not? What would be 'unethical' about it? Every product creator has a markup - why else would you bother to create products if there were no profit to be gained?

    When you have a formula you use for your products - and you research pricing of competing products - that tells you the limit to spend on product development in order to reach your projected profit.
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    • Profile picture of the author rockerjaw
      Thanks for the reply. I see, by doing a price comparison on the competitors we can judge the a viable amount to spend on product creation.
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      • Profile picture of the author yukon
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        Originally Posted by rockerjaw View Post

        Thanks for the reply. I see, by doing a price comparison on the competitors we can judge the a viable amount to spend on product creation.
        NO, NO, NO!

        Believe me, just because someone is selling for one price does not mean that's what people are willing to pay.

        I've bought on ebay, jacked the price up 50 to 100%, people still buy. A lot of traffic won't do comparison shopping and a lot of traffic doesn't care who else is selling the same product, they don't have time for all that, they want it now.

        You can use competition as a ballpark for getting started on prices but I would always go higher and see how sales go. You have to be testing this stuff on real traffic.
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        • Profile picture of the author rockerjaw
          Thanks again. Test the pricing on real traffic and refine as needed. Mark up as people will pay for the convenience.
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    • Profile picture of the author rockerjaw
      Thanks Yukon. Point Taken.
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  • Profile picture of the author IGotMine
    I start my prices on the high side of what I think the market will bear. I always have a pretty good idea of what that is beforehand.

    I like to have room to test lower prices and offer meaningful discounts.

    Your ability to sell anything at any price will depend on many factors. Frank could sell a simple report to his groupies for $700. You might not be able to get anyone to give you seven dollars for the same report.
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    • Profile picture of the author rockerjaw
      Thanks for the reply Igotmine. By starting your pricing at the higher level of the market you get to test the response and also give yourself enough wriggle room to lower the price or offer discounts.

      I get that as Frank Kern has an established reputation/experience/clientele I would expect his reputation to do most of the work for him. Other unidentified factors will also determine the ability of the seller to sell at premium rates.
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      • Profile picture of the author yukon
        Banned
        Originally Posted by rockerjaw View Post

        I get that as Frank Kern has an established reputation/experience/clientele I would expect his reputation to do most of the work for him. Other unidentified factors will also determine the ability of the seller to sell at premium rates.
        True and he did that with dramatic hype sales pitches.

        "Oh pity me, I slept on a couch in a mobile home. BUT LOOK AT ME NOW! I'M A MILLIONAIRE"


        How's that for ethics, lol?
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        • Profile picture of the author rockerjaw
          Thanks for the reply Yukon. Suppose I give him an element of trust. Presumably if he actually did sleep in a motor home and became a millionaire. I'd say there's nothing unethical about that. If not, then he's a liar: i'm not judgemental, some people lie and if they do may be I should.
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          • Profile picture of the author yukon
            Banned
            Originally Posted by rockerjaw View Post

            Thanks for the reply Yukon. Suppose I give him an element of trust. Presumably if he actually did sleep in a motor home and became a millionaire. I'd say there's nothing unethical about that. If not, then he's a liar: i'm not judgemental, some people lie and if they do may be I should.

            Lol, I'm not suggesting you should lie to anyone. I'm not even saying Frank lied, I don't know/care either way. I know it was a cheesy pitch and he's changed his tone over the years.

            I will say Frank impressed me once with one of his short sales pages where he had the credit card order form directly on the sales page. Nobody does that on the web (nobody). That's an old tactic used in offline paper magazines.

            My easiest selling technique has always been very simple straight forward bullet list, I swear by it, it's always worked for me in multiple niches. List the product facts like a checklist (bullet list). This way there's no guessing for the buyer and you're not guaranteeing anything.
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            • Profile picture of the author rockerjaw
              Originally Posted by yukon View Post

              Lol, I'm not suggesting you should lie to anyone. I'm not even saying Frank lied, I don't know/care either way. I know it was a cheesy pitch and he's changed his tone over the years.
              Hi Yukon. I appreciate it mate. I'l definitely be using your bullet system in future.
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    • Profile picture of the author rockerjaw
      Hi Internet Trillionaire. My ethics are based more on instinct rather than intellect it has to feel right. For me if I can justify a high margin through discussion, education, or experience I am fine to charge a premium. My latest threads are exploring this possibility.
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      • Originally Posted by rockerjaw View Post

        Hi Internet Trillionaire. My ethics are based more on instinct rather than intellect it has to feel right.
        Acting on instinct, is like acting on your emotions. One day you feel like working on growing your online business, and the next day you feel like you want to go on holiday.

        I would rather do the calculations, to make sure that I can actually make a profit. I will then immediately test my offer with paid traffic, to make sure I'm able to turn a profit, and scale the business right away.

        Getting stuck on pricing may just keep you from getting started.

        Originally Posted by rockerjaw View Post

        For me if I can justify a high margin through discussion, education, or experience I am fine to charge a premium. My latest threads are exploring this possibility.
        How are those possibilities working out for you?
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        • Profile picture of the author rockerjaw
          Your disagreeing with my ethics based on your technical ability to market. Its chalk and cheese.

          Basically, after these discussions my value goes up: and that will be reflected in my pricing.
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  • Profile picture of the author yukon
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    It's not like you're selling life saving pharmaceuticals.

    Mark the price up whatever you want it to be.

    Do you think convenience stores care about your feelings when they charge $1.50 for a cold pop that they've paid $0.35 for the same drink? They don't care and you'll still buy the drink.
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  • Profile picture of the author Grey7
    Interesting concept on pricing
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  • Profile picture of the author dilipcybex
    In fact, most pricing follow the same pattern. It is normally @30% most companies sell their product to wholesale distributors. ie, by the time it reaches the market, it is sold at 3.5 times the company sold it, with profit. The actual production cost is much lower for the company.
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    • Profile picture of the author rockerjaw
      Thank You for the reply. Mark up prices of 3.5 times the production cost. Got it.
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  • Profile picture of the author YuriiLP
    There is no ethics in pricing by default. You sell something to get as much profit as you can, otherwise, why would you sell?
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    • Profile picture of the author rockerjaw
      YuriiLP Hi. Thanks for the reply. I suppose not everone is concerned with making money. Some people are actually concerned about solving the problem. Personally, I wanted to be able to provide guys like me a few years ago when I needed a break and was looking for a source of revenue but not knowing where or how to do it. I feel for the guy like that and want to charge him bare bones to get him we he wants. the problem is he doesnt that what he wants is more simple than what he thinks. so i'm drawn between giving him want he wants or what he needs. What he needs=no sales, what he wants=maybe$$$.
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  • Profile picture of the author ryanbiddulph
    I take the view that it's only money. So no big deal. If someone has issues with the price charged, it is their fear aka poverty consciousness and has all to do with their mindset and nothing to do with the neutral means of exchange.

    Ryan
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    • Profile picture of the author rockerjaw
      Hi Ryan, Nice ti hear from you. Thanks for taking the time to reply. I take it as, money is an idea that some people will think poorly of. those that are looking for mutual exchange are more your concern. Its ok to charge what ever we marketers set because only those that find benefit from it will purchase.
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  • Profile picture of the author Jason Kanigan
    @rockerjaw, please quote the post so people can see who you are responding to. Most of the time it isn't clear.

    Any number or "rule of thumb" you get is arbitrary. Most "facts" are opinions. It's all a BS story we make up.

    Value is indeed the reason someone buys a thing for a higher price than being sold elsewhere. And that's a perception issue, a marketing concept.

    There was a guy who would sell computers for $10K when the going rate was around $3K. How could he do that? "Because they're buying the computer from ME." Somehow he got that sense of value perception in the buyers' heads around to the belief that getting the thing from him WAS better and worth triple what they would pay elsewhere.

    I recommend reading some Dan Kennedy, especially https://www.amazon.com/No-B-S-Price-...dp/1599184001/

    And you will discover that just about everything is Opinion.
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  • Profile picture of the author affmarketer101
    Nothing wrong with it. The price is the value that your customers "feel" it worth. If you can create a tool with the cost of $1, but you can tell someone that it can save them $1000/month (of course, you should prove it), there is no reason they don't buy them at the price of $8.
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    • Profile picture of the author rockerjaw
      I agree. If its proven to work and save money then the fact that it cost little to produce only increase its value in my mind.
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  • Profile picture of the author DIABL0
    Markup to a certain degree is irrelevant other than it needs to be high enough to generate a net profit.

    What is it worth to someone and what will they pay is what matters.

    Also, at what price produces the highest ROI, which typically isn't the very top dollar that produces sales.
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    • Profile picture of the author rockerjaw
      Originally Posted by DIABL0 View Post

      Markup to a certain degree is irrelevant other than it needs to be high enough to generate a net profit.

      What is it worth to someone and what will they pay is what matters.

      Also, at what price produces the highest ROI, which typically isn't the very top dollar that produces sales.
      It starts getting complex really. Its nice to be able say. Ok it cost 20 bucks to make i'm gonna charge 2000 bucks for it. No stress now all I needs is a market.
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  • Profile picture of the author Rose Anderson
    Are you talking only about physical products? In that case there is a set cost to produce each item.

    With an information product it's a little more vague. How much do you value your time? How many hours did you spend on research? How long did it take you to write the product or produce the videos? More importantly, how many years did you spend gaining the experience that allowed you to learn the information that you're sharing?

    In the end, you much convince consumers that what you're selling is worth the price you're asking. And if you want repeat buyers, you'd better be telling the truth.

    Rose
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    • Profile picture of the author rockerjaw
      Hi Rose. Thanks for taking the time to reply. I get your meaning. There are varying conditions when pricing information products. Where as the cost of physical products are more easily determined.
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  • Profile picture of the author radu
    Originally Posted by rockerjaw View Post

    After listening to an audio clip of Tony Robins interviewing Frank Kern. Frank Kern goes on to say that he prices his products at 8-10 times the cost the product takes to make i.e if the product costs $50 to make he sells it for $400 minimum. Going on to say that you can get it if you just ask for it and it means you don't have to sell as much stuff.

    Is this an ethical way of pricing? Why?
    Interesting subject..this is a good question.

    1. It's all about perception of the value offered

    2. People buy from people in the IM world, for ex. if I like and trust "frank kern" I'll buy from him..

    3. There always will be higher priced products (for the same value) sold to the people that have higher budgets to spend...we can see this in many industries (fashion, art, etc) how big brands sell for some huge prices their products.. In this case we can consider frank kern a brand and he can afford to sell at such high prices..
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    • Profile picture of the author rockerjaw
      Originally Posted by radu View Post

      Interesting subject..this is a good question.

      1. It's all about perception of the value offered

      2. People buy from people in the IM world, for ex. if I like and trust "frank kern" I'll buy from him..

      3. There always will be higher priced products (for the same value) sold to the people that have higher budgets to spend...we can see this in many industries (fashion, art, etc) how big brands sell for some huge prices their products.. In this case we can consider frank kern a brand and he can afford to sell at such high prices..
      Thanks for the Reply Radu. Im finding it interesting too.
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  • Profile picture of the author echelon
    If customers feel that they are satisfied with the product,or if they can earn more than they spent, it may be fine. However, Frank Kern is somewhat like a brand. Thus, people may find satisfaction in owning one of of his products.
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    • Profile picture of the author rockerjaw
      Originally Posted by echelon View Post

      If customers feel that they are satisfied with the product,or if they can earn more than they spent, it may be fine. However, Frank Kern is somewhat like a brand. Thus, people may find satisfaction in owning one of of his products.
      Thanks echelon. Cool. Like owning a pair of nikes or your favourite label. People would pay more for Frank Kerns work because of his brand. Like keeping up with the Jones.
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  • Profile picture of the author ChrisBa
    Originally Posted by rockerjaw View Post

    After listening to an audio clip of Tony Robins interviewing Frank Kern. Frank Kern goes on to say that he prices his products at 8-10 times the cost the product takes to make i.e if the product costs $50 to make he sells it for $400 minimum. Going on to say that you can get it if you just ask for it and it means you don't have to sell as much stuff.

    Is this an ethical way of pricing? Why?
    I don't think this is a problem with ethics at all. Someone doesn't need to buy it. I would only say it becomes an ethics issue if there are hidden fees or an attempt to scam someone.
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    • Profile picture of the author rockerjaw
      Originally Posted by ChrisBa View Post

      I don't think this is a problem with ethics at all. Someone doesn't need to buy it. I would only say it becomes an ethics issue if there are hidden fees or an attempt to scam someone.
      Hi Chris. Thanks for taking the time to reply. Much Appreciated.
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  • Profile picture of the author Nick Garavaglia
    I think we need to look at the question with a different point of view.

    First of all, if you produce a product or service, it's because you're doing business. As we all know, doing business has the main objective of earning.

    Up to here everything is normal.

    However, if you want to do business seriously and therefore with a different background value you need to make high-value content and not copying other famous flagship products.

    Since a valuable content requires time to be constructed, prepared, corrected and advertised, it is necessary to have a return.

    The value of a valuable product can not be judged by a simple comparison with similar products or other market indices.

    First of all an analysis of its hourly or daily value should be made, in order to have an idea of ​​how much time and therefore economic value to attribute to the product.

    Once this is done, a search must be made according to the reference market niche. Clearly if you have a reference niche for people looking for free or low-priced content and think about it:
    "My product is worth $ 100 but Frank tells me to multiply it by 8 so I make $ 800" you will not be very successful.

    So your market niche decides the price and the consequent positioning of your product.

    If you create value, bring solutions to the market, you have a strong and recognized personal brand, you will be able to position your products at the prices you decide.

    I'll give you an example.

    You talked about Tony Robbins;

    Tony has a personal brand like a few. When you hear his name, you already speak of excellence in the training field.
    Precisely for this reason, for this international exhibition he sells his private consultancies for $ 100,000 for 2 days.
    Is it an ethical price? Is it a fair price? Only the value that will bring this formation will be able to tell you, but given its appearance I do not think you will be disappointed.

    But even given the high price, there is the queue of people who require these consultations.

    So as you see, if you bring value and solve problems there are no problems in demanding what you think is right.

    To your success

    Nick
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    • Profile picture of the author rockerjaw
      Thanks Nick. A really great through answer. To a question i'm sure many marketers think on. Its hard to remember every point your making though I'll get there in the near future. Your bringing to point a couple of things. 1: that value of a service or product is based on the person selling it, 2: that technical aspects such as time cost of material, skills and more should be considered when pricing.
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  • Profile picture of the author Kay King
    Thanks for taking the time to reply.
    Please do not use posts to thank each person - use the 'thanks' button instead That's what it is for.
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  • Profile picture of the author Judey
    If you've brought your target audience to a point whereby they now trust you & the product.

    Price shouldn't be the problem.

    Most people buy what they perceive is best for themselves.

    Price objection is the customer way of telling you that value is lacking or not evident.
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    • Profile picture of the author MOCrendon
      Judey - post 17th May 2018


      Perfectly explained. IMO, yours is the best response
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    • Profile picture of the author OptedIn
      Originally Posted by Judey View Post

      Price objection is the customer way of telling you that value is lacking or not evident.
      Price objection is simply another way of saying I don't have the money for that without having to admit that they don't have the money for that.

      Sometimes, a cigar is just a cigar.

      Cheers.
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  • Profile picture of the author SmartMovesLife
    Cost is a factor in pricing but often not the most important one. Also take into account:
    • How much is it worth to the buyer (especially if the purchase can make money for the buyer)
    • What alternatives does the buyer have for this purchase (are there competing products?)
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  • Profile picture of the author tinytimsmith
    Supply and demand.. Capitalism at its finest. It's not a perfect model but it't the best we have
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  • There is no ethics on price.
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  • I mean it's worth what it is paid for.. If you can get it sold, get it sold.
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  • There is no rule on pricing.

    Most of the time you are not going to sell anything at that high of an ROI if you have no brand.

    The better your brand name is the higher you can raise (and sell) your products.

    Hopefully it's well made or helpful.
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  • Profile picture of the author kimberly91
    Ethics does not come into pricing. It all comes down to value and each product/service has different value to different people.

    Ethics and pricing is more important when it comes to necessity products like food/toilet paper/pain killers etc. Things we actually NEED.
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  • Profile picture of the author crackhouse
    It is not a matter of ethics, not usually anyway. The market sets the price. You sell for whatever the market is willing to pay.

    I know there are certain ethical problems, especially for the phillosphers among us, but as long as you're not jacking up the prices on cancer or aids drugs, and people are DYING because of your pursuit of profits, i think you can sleep easy at night
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  • Profile picture of the author Hazaron99
    it all depends on the person most of the time
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  • Profile picture of the author IntegrityWorks
    As someone once said, "the value of a thing is the money it will bring". If the information you provide about the product or service is accurate, complete, honest, etc. and the buyer considers it to be good value and worth the cost, then fine. That's where the ethics come in. Are you misleading, misrepresenting, misinforming, using half-truths, knowing and taking advantage of the buyer's ignorance, abusing their trust, manipulating, using tricks to fool the buyer for your own gain, etc.?
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  • Profile picture of the author DripRevenue
    The only rule that I have for pricing is that products always deliver more value than they cost. Price is simply what you pay, value is what you get.
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  • Profile picture of the author King Manu
    I agree with that other members said. You can put whatever price you want as long as you deliver value. If that brings positive results, you are doing something good.

    If people complain the price is too high, that means they either don't get enough value, or they are not the right audience.
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  • Profile picture of the author CarolSummer
    Originally Posted by rockerjaw View Post

    Is this an ethical way of pricing? Why?
    Simple..supply and demand which is capitalism at its finest lol
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