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I came here for an argument (about pricing)

by phil.wheatley
14 replies
Hi All

EDIT: The below refers to affiliate marketing rather than your own product.

Actually, more of a debate rather than an argument. Basically, I read an interesting statement yesterday that said "It's often no more difficult to sell an expensive product than a cheap one". I guess by that you could argue if somebody is looking to buy a Rolex online, the sort of person buying wouldn't think any more about the money than somebody with less money buying a cheaper product.

The thing is, with a big commision, you may only have to make one or two sales a day to be financially free.

Now, on the flip side of the argument is making a product so cheap but of high value, the though of cost barely enters the person's brain because....well...it's a no brainer - but you would have to sell a lot more. Often though it would seem the cheaper purchase is to get them into a sales funnel.

So, what are your opinions on this...and below a quick classic clip relating (sort of) to this post.

Phil

#argument #pricing
  • Profile picture of the author dvduval
    I think it just depends on what is already available on the market. If there is nothing comparable, and your product is really good, you can charge a premium. If you are competing against other products with established prices, you need to set your own price to be competitive with what is out there.
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  • Profile picture of the author phil.wheatley
    Ah....sorry, I should've said 'relating to selling products as an affiliate' rather than your own products.
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  • Profile picture of the author Paul Hancox
    Hi Phil

    Well, I do agree with the statement to a certain extent, in the context of affiliate marketing.

    I would suggest that the key is matching up the right clients with the right product.

    I wouldn't try selling a yacht to someone who is broke, or a $7 "how to make money with article marketing" report to someone like Warren Buffet.

    However, higher priced items may need to be sold differently. As a customer, if you were going to spend $7,000 on something, you'd probably want much more info, details and reassurance than someone spending $7.

    So it may not be more difficult, but it may require more effort.
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  • Profile picture of the author phil.wheatley
    Ok Paul, thanks, some very good points. I'm thinking alone the lines of say Jewelry or something, but yes, matching customer to item is the key.
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    • Profile picture of the author JohnMcCabe
      Phil, you can try separating the product from the price.

      Here's an example I nicked from Dan Kennedy...

      Three wristwatches - a $50 Times, a $5,000 Rolex and a $50,000 Tag-Heuer. All three will tell you what time it is.

      The Rolex is more than just a watch. It's a statement. "I've made it and I want the world to see it. So I'm going to shoot my cuffs every chance it get so you can gape at the big-ass oyster on my wrist and admire me for being able to buy it."

      The Tag is even higher. "I have so much success that I can afford to buy the absolute best in the world, and show the world how much class I have with this understated, but extremely valuable watch with its inlaid jewels. Much better than a gaudy Rolex, and much more expensive."

      The Timex is for the people who just want to know what time it is and aren't out to impress anybody. The funny thing is, you'll see the same Timex on a blue-collar guy on the way to a job site and on the billionaire owner of the building and the building company.

      Next time you see a big free-agent sports signing, see who has more bling - they guy who's suddenly worth several million dollars a year, or the guy signing those checks...

      Bottom line, it's far less about the product or the price than it is about the experience of ownership.
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      • Profile picture of the author bgmacaw
        Originally Posted by JohnMcCabe View Post

        Three wristwatches - a $50 Times, a $5,000 Rolex and a $50,000 Tag-Heuer. All three will tell you what time it is.
        Your post reminded me of this scene from Trading Places

        Pawnbroker: Burnt my fingers, man.
        Louis Winthorpe III: I beg your pardon?
        Pawnbroker: Man, that watch is so hot, it's smokin'.
        Louis Winthorpe III: Hot? Do you mean to imply stolen?
        Pawnbroker: I'll give you 50 bucks for it.
        Louis Winthorpe III: Fifty bucks? No, no, no. This is a Rouchefoucauld. The thinnest water-resistant watch in the world. Singularly unique, sculptured in design, hand-crafted in Switzerland, and water resistant to three atmospheres. This is *the* sports watch of the '80s. Six thousand, nine hundred and fifty five dollars retail!
        Pawnbroker: You got a receipt?
        Louis Winthorpe III: Look, it tells time simultaneously in Monte Carlo, Beverly Hills, London, Paris, Rome, and Gstaad.
        Pawnbroker: In Philadelphia, it's worth 50 bucks.
        Louis Winthorpe III: Just give me the money.
        In other words, it's worth what the market at hand is willing to pay for it and how desperate the seller is.
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  • Profile picture of the author Stacey Wockenfuss
    I am doing a case study on this right now and testing it in many different faucets. I have a very good friend who has sold at least a million dollars in ebooks and guides pricing them at only $4.95 and $9.99 respectively. His concept is that you should price your ebook stripping away all the costs associated with actually publishing it (ie publisher costs, commission, pr, listing, ect)

    Its a mind game at this price point because most people (consumers) will buy anything for under $10 dollars and think nothing of it. Its not a big purchase, so not a lot of thought goes into clicking buy now. Plus they don't lose much out of the deal.

    Now I have also worked for some very successful internet marketers who priced their products much much higher (and the products were junk btw), but they were selling a perceived value as in the higher the price of the product, the more perceived value it had.

    I think you should price your products at whatever you feel comfortable with. For instance, I think my products are worth 10 times more than what I sell them for but 1) I want to make them more affordable for the everyday Joe (right now people are holding on to their money tighter so purchases are thought about more) 2) My product may be priced lower, but I am makiing more sales at that price point than I would at the higher price point therefore evening out my money goal in the end.

    Like I said, do what makes you feel comfortable. Its your business. But its a lot easier to start low and go high then to start high and go low.

    Stacey
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  • Profile picture of the author mloveridge17
    Pricing is a fascinating arena. I have a friend who got a Doctorate in Statistics because he loves studying Price Elasticity so much. Of course, he just likes the academics. But the reality is that different price points will different results. The trick is finding the price point that maximizes profit. That could be at a higher price with lower volume, a lower price point with a higher volume, or somewhere in between. The only real way of finding it is to do some split testing. Of course, it's always easier to lower a price than it is to raise it.
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  • Profile picture of the author garyv
    The good thing about being an affiliate, is that you don't have to limit yourself to one product. I sell many in-expensive products and sell dozens per day to make up a decent income. I also sell some higher end products - maybe 1 per month on average and the income I receive from those probably average out to being close to the same as the cheaper products. I devote about the same amount of time promoting all of these products, but you tend to see your progress faster when you're selling cheaper items. However it feels better when you see a giant commission every now and then.

    My point is - do both. And as always, keep the ones that make you profit, and ditch the ones that don't.


    PS - Great video - I love monty python
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  • Profile picture of the author phil.wheatley
    Guys - these are some great views. I think they relate more to how much you would price your own products though. I'm more thinking about would it be easier to sell 1 rolex as an affiliate (to use the above example) to make your daily target or sell 10 Timex's to make the same money. I think Gary has a good answer, try both and see which works best.

    I'm with you Stacey on the perceived value thing too, some of the IM products priced at 2 thousand dollars, and do they REALLY have that much more than some of the 100 dollar products? Well, I guess that comes down to how much will it make you.

    I'm taking some of this high priced idea from Frank Kern's recent hand written pdf about how first class tickets on a plane are always full...so why not sell firts class tickets instead of trying to sell lots of economy tickets.
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    • Profile picture of the author JohnMcCabe
      Originally Posted by phil.wheatley View Post

      Guys - these are some great views. I think they relate more to how much you would price your own products though. I'm more thinking about would it be easier to sell 1 rolex as an affiliate (to use the above example) to make your daily target or sell 10 Timex's to make the same money. I think Gary has a good answer, try both and see which works best.
      Phil, it doesn't matter if the product is your own or not. Sticking with my watch example...

      Tiffany doesn't sell Rolexes or Tags, they sell the experience of buying at Tiffany. The sometimes-fawning but always expert service. The famous gift box. The reputation of only carrying top-quality merchandise.

      As an affiliate, you can try to create experiences for your buyers. You can offer the most honest and comprehensive reviews. The easiest to navigate site - or the most exclusive. Sell status, validation and approval, not watches.

      You might want to pick up Dan Kennedy's book on selling to the affluent.
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    • Profile picture of the author Steven Wagenheim
      Phil, it all depends on who your target market is.

      If you're selling to people who are used to buying high end products, you'll
      probably have a much easier time than trying to sell a $997 home study
      course to somebody who has just spent the last 3 months working paid to
      read email programs.

      Conversely, people who are looking for some serious home study are less
      likely to buy a $17 ebook. They will look at it as something that will
      probably not be of much help to them, at least in their mind.

      At least this has been my personal experience.

      Everybody's mileage will vary.
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  • Profile picture of the author phil.wheatley
    John - Yeah, it's crazy but I don't have any of Kennedy's books...even though I have all of Frank's stuff, who from what I understand learnt it all from Dan. Thanks, I will get his book for sure. The experience thing is like buying the Ferarri right..not because of the car, but becasue it makes you feel like Bond, or a rock star. p.s I'm still jealous of that fish you caught in your avatar, I would show you my fishing site, if the iframe thing hadn't eaten it up! :-O

    Steven - Thanks for your reply and I've taken that on board, keeping the target audience in mind..which is easy to forget, well, in my case. I guess you could argue certain keywords relate to a certain group of people..or dare I say a certain class and money bracket.

    Phil
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    • Profile picture of the author JohnMcCabe
      Originally Posted by phil.wheatley View Post

      John - Yeah, it's crazy but I don't have any of Kennedy's books...even though I have all of Frank's stuff, who from what I understand learnt it all from Dan. Thanks, I will get his book for sure. The experience thing is like buying the Ferarri right..not because of the car, but because it makes you feel like Bond, or a rock star. p.s I'm still jealous of that fish you caught in your avatar, I would show you my fishing site, if the iframe thing hadn't eaten it up! :-O

      Phil
      You got it. To some people, a Ferrari is just a car, to others it's a statement of who they are. Four out of my last five cars are/were Buicks. They're sturdy, reliable, comfortable and they get me from place to place. I'm not a car guy...

      Funny you should mention that fish.

      It was part of one of the most remarkable days of fishing I've had. I fished with a professional guide, and the trip lasted about six hours, total. During that time, we only caught 12-15 fish, but they were all very good fish, snook and redfish and trout. We didn't catch anything small, which is unusual. It's not uncommon to catch dozens of fish in that time frame, but most of them will be small.

      Tying it back to our discussion of pricing...

      All told, that six hour trip cost me about $500, and to me it was worth every penny. I got to catch a lot of really nice fish, from a top-notch boat, using top of the line equipment with a local expert to guide my way.

      I hate to think how much I've spent over the years on fishing gear. An acquaintance of mine is a semi-serious angler, but he's happy using the $30 outfit he picked up at Wal-Mart. Yet I know for a fact he's spent over $1,000 for a golf putter custom fitted to him.

      Trying to sell me a Ferrari would be a waste of your time. So would trying to sell me a $1,000 putter. That's not what floats my boat.

      Hit me with an offer for a custom-made fishing rod with a Van Staal spinning reel, at the right time, and I'm an easy mark. Same with another friend of mine who collects hand-made bamboo fly rods.

      If you want to charge high prices, you have to disconnect the price from the product and sell to the prospect's values. People will pay a lot of money for approval, validation, acknowledgement and respect.
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  • Profile picture of the author moosedrool
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    • Profile picture of the author JohnMcCabe
      Originally Posted by moosedrool View Post

      As an affiliate, why not make yourself an authority and sell both. Cater to the masses and the high end. Have two sets of price ranges and reviews, I don't see it as an either or thing.

      I know a lot of people set up small sites and focus on one range... I think they are missing out.
      No reason for an affiliate not to go after both ends of the market, but I would do it on different sites.

      One thing very valuable to mass-affluent and affluent buyers is exclusivity. They don't want to be lumped in with the masses, they want to be acknowledged and catered to.

      Let's step away from physical products altogether and look at an affiliate who wants to work in the travel market.

      Take cruising, for example...

      If you look at the accommodations aboard a cruise ship, you'll see several levels - inside cabins, sea view cabins, cabins with balconies. You'll also see a level created to cater to the high rollers. Suites on their own deck, with their own concierge and their own amenities. Physically separated to keep the common folks out.

      The ship leaves the same dock, stops at the same ports and arrives back at the same time. But it isn't the same trip.

      If I was promoting cruises to families on a budget, I'd create a site dedicated to showing how much you get for your cruise dollar. Comfortable room, all meals, special programs for the kids all for one inclusive price.

      If I was promoting the same cruises to affluent buyers, I'd stress the luxury suite, the fact you need that specially coded pass just to get on their deck, the private butler and concierge, the special privileges and amenities they receive. Basically, how special they are.

      It's hard to do that on the same site. Easy on a connected network of sites. The umbrella collecting all the sites together becomes the authority.
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