Comparative Pricing To Stimulate Sales And Promote Your "Go To" offer

9 replies
This is not about pricing your offer to increase sales of a single offer. It's about pricing your offer...compared to other offers you have, to stimulate sales of the offer you want them to buy..

Buyers have an unconscious need to feel as though they have "shopped around". They want to feel as though they didn't just buy the first thing they saw. They want to feel like they considered all the options before they bought.

This post is about how to give them that feeling, by positioning your offers against each other..to stimulate your sales.

It's better if the buyer feels they have shopped before they see you...that can be achieved by your advertising, or your web presence. But let's assume you are talking to a prospect cold, and they haven't been doing any research on what you are selling.

I'll use two examples from my businesses. These can easily be tranfered to any business.

In my retail store, I have about 75 different vacuum cleaners on display. And to any casual shopper, it looks like we sell them all. But the reality is...95% of our sales are from 5 different models at different price points.
And they are positioned on the floor so the comparisons can easily be made.

For example I have the single most expensive upright vacuum cleaner at the end of a display line...and it's price is $1,399. I have the second most expensive upright vacuum at $999...and the third most expensive vacuum next to it at $899.

This is all to sell the $999 vacuum, and allow the customer to feel they shopped around, and got a bargain.

And it works like this.....the features on the $899 are great, but the $999 vacuum has several features that make it more desirable for most shoppers. The $1,399 vacuum has little advantage over the $999 vacuum, but it priced to not be sold, but to give a favorable comparison. And although the $1,399 vacuum has a few features that set it apart, they aren't features that most people care about, and they are minor.

And so, when I show the three machines together, almost always (assuming they buy one of them) the customer takes the $999 model, confident that they have comparison shopped and got a good deal.

The truth is, the $1,399 model is at suggested retail, and the $999 model is discounted by $200. The $899 model is at suggested retail as well.
So why do I want to sell a discounted vacuum cleaner? I have learned from years of sales experience that it's far more likely that the shopper will by right now (which is my main concern) if it looks like a very obvious..brain dead decision. And they are far more likely then to buy the $999 vacuum cleaner, than say a $499 vacuum cleaner.

We have three price groupings in our upright vacuum cleaner section..at these price points..

$299-$399-$549

$699-$799-$899

$899-$999-$1,399

All of these groupings are designed to sell the middle machine....and give the customer feeling that they have shopped around.

When I sold my own advertising (for small business owners) course in front of groups of business owners...

I had three offers that I mentioned. One for $499, one for $599, and one for $799.

All of these were designed to sell the $599 course. The $499 course had everything they needed. It was the complete written course. But it didn't include the CDs of the written course material. And of course, almost nobody will read 300 pages of course material...but listen to 6 hours of CDs? Sure.

The $799 offer? It was the same, but included an hour of telephone consulting time.

Honestly, I had that offer just to give them something to compare the $599 course to.

But about 20% of the buyers elected to get the $799 package. Eventually, I raised the price points to $699-$799-$1,299....and included two hours of consulting time (that I really didn't want to do) in the highest priced package. That cured them. I think I only had one guy decide on the $1,299 offer.

Raising the price didn't affect the percentage of the audience that bought.

But if I just had one offer at $799, the people would be deciding if they wanted to buy. I just wanted to change that discussion to "Which one is the better value for me?"

If you give the customer three options, and make the middle option the most attractive..they are far more likely to buy that middle offer than to buy nothing.

What you want to completely stay away from however, is what I like to call (in my store) "The tour". If the customer starts asking questions about 8 different vacuum cleaners, and I allow that to happen. they never buy anything...too much information to process. And they never build a desire for a specific vacuum cleaner.

It's why I don't list more than three closely related offers when selling or when advertising.

I have tried making three offers where the top or bottom offer was really the one I wanted to sell, but selling the middle offer is easier and is more likely to conclude in a sale. I have my suspicions as to why this is true, I just know it is.

I hope this helps someone.
#comparative #pricing #sales #stimulate
Avatar of Unregistered
  • Profile picture of the author gainerp
    Banned
    Hi,

    Thanks for sharing this information.
    {{ DiscussionBoard.errors[11297252].message }}
  • Profile picture of the author umc
    I can't remember offhand which book it was that I read, but it corroborated what you're saying here. I believe they referred to this as "the magic middle". Another great post!
    {{ DiscussionBoard.errors[11297410].message }}
  • Profile picture of the author JohnMcCabe
    Back when I ran my "Outdoor Adventures" ezine, I used this same approach to sell affiliate offers.

    I'd write the main article about some fishing technique, then at the end I'd add an equipment recommendation tailored to the technique.

    When I offered a single recommendation, I'd get a handful of sales.

    Then I started showing three packages. I started by calling them good, better, best. I eventually changed that to Beginner, Best Value, and Pro. Sold very few of the Beginner packages, mostly Best Value, and a varying amount of Pro level.
    {{ DiscussionBoard.errors[11297470].message }}
    • Profile picture of the author Claude Whitacre
      Originally Posted by JohnMcCabe View Post


      Then I started showing three packages. I started by calling them good, better, best. I eventually changed that to Beginner, Best Value, and Pro. Sold very few of the Beginner packages, mostly Best Value, and a varying amount of Pro level.
      Giving each level a name is smart. "Pro" was smart.

      One thing I didn't mention..and this only applies to one on one selling in person....

      Of the three offers, the prospect would usually start asking questions about one offer, or show more interest in that offer.

      That's the offer that I'd start recommending. No matter if it was the lowest offer, I'd reinforce their bias toward that offer. Why? They were going through the process of rationalizing what offer (or price point) was best. I'm just glad they were doing it out loud.

      I was supporting that direction. Why? Because it was far more important to me that they would simply buy..than what offer they would buy.


      Most people were attracted to the middle offer, but that's how i priced them...to make the middle offer stand out as the best offer.
      {{ DiscussionBoard.errors[11297479].message }}
  • Profile picture of the author misterme
    The $1,399 vacuum has little advantage over the $999 vacuum, but it priced to not be sold, but to give a favorable comparison. And although the $1,399 vacuum has a few features that set it apart, they aren't features that most people care about, and they are minor.
    I've done that to great success before when presenting three options. I call that the "decoy" tactic. The customer sees they can get pretty much everything the top priced offer contains in the middle-priced offer, and it costs much less. The only stuff missing is a few non-essentials they can do without and weren't thinking of in the first place. That adds another motivator on top of their natural proclivity to choose the middle.

    So in this way their decision making is directed between comparing the two options, instead of deciding yes or no concerning only one.

    What you might experiment doing is raising the lowest option's price to that of the middle option. Then it becomes a bit easier for people to compare because you've taken price out of the equation. The middle option becomes even more attractive, and people might even think a pricing mistake was made that they want to take quick advantage of before the shop discovers it, so chances are you'll sell even more of the middle option.
    Signature
    "Best book on answering objections I have seen... it's for photographers but it has brilliant techniques you can use in any business." - Claude Whitacre. When They Say That, You Say This (Amazon Kindle)
    {{ DiscussionBoard.errors[11298284].message }}
    • Profile picture of the author Claude Whitacre
      Originally Posted by misterme View Post

      I've done that to great success before when presenting three options. I call that the "decoy" tactic. The customer sees they can get pretty much everything the top priced offer contains in the middle-priced offer, and it costs much less. The only stuff missing is a few non-essentials they can do without and weren't thinking of in the first place. That adds another motivator on top of their natural proclivity to choose the middle.
      I couldn't have said it better. Exactly what I do. The additional features the top model (that I show them) has are never desirable features....never essentials. That top model is really there to sell the middle one.

      Originally Posted by misterme View Post

      [B]
      What you might experiment doing is raising the lowest option's price to that of the middle option. Then it becomes a bit easier for people to compare because you've taken price out of the equation. The middle option becomes even more attractive, and people might even think a pricing mistake was made that they want to take quick advantage of before the shop discovers it, so chances are you'll sell even more of the middle option.
      I've almost done that. If I really want them to take the middle option (for their benefit, not mine) I've sometimes just dropped the price of the middle option to the price of the lower option. I justify it by saying "I happen to have far more of these models in stock. So if you'll do me the favor of taking this model..I'll give it to you for the same price as the one you are looking at. Fair enough?"

      It makes them feel like we are both benefiting.

      Really, it's whatever I think will speed up the buying process.
      {{ DiscussionBoard.errors[11298301].message }}
  • Profile picture of the author Alex Cohen
    I had three offers that I mentioned. One for $499, one for $599, and one for $799.

    All of these were designed to sell the $499 course. The $399 course had everything they needed. It was the complete written course.
    Are the prices stated in the second paragraph (above) typos?

    Alex
    {{ DiscussionBoard.errors[11299152].message }}
    • Profile picture of the author Claude Whitacre
      Originally Posted by Alex Cohen View Post

      Are the prices stated in the second paragraph (above) typos?

      Alex
      Thanks for letting me know. I corrected it.

      It wasn't so much a typo as not thinking. When I just started selling my advertising course when speaking ...just the first time, the prices were $399 or $499 (with the CDs) I didn't have a third option.. My sales experience that day taught me two things;
      1) I wasn't charging enough.
      2) I didn't have to bring enough for everyone to get a course right then. These packages weighed about 8 pounds each. and most people would rather have me ship it to them anyway.

      i immediately raised the prices $100, and kept them there for a year or so...and included the third option. It was then, that I added a one hour phone consulting service. I just didn't include this in the story. But for some reason, my brain insisted that I still type out those figures. And...I missed it when I re-read the post.

      Added later; As an experiment, and on advice I got from Bill Glazer (of Glazer Kennedy), I once showed the same course at $1,499...the exact one I sold for $499, then $599, then $799. I also gave a one year money back guarantee.

      I sold about 60% the same percentage of the audience as I did at $799. But I had a few cancellations (refunds)

      And frankly, I hate refunds even more than I like sales.so I lowered the price back down to $799...and lost the "one year money back guarantee".
      {{ DiscussionBoard.errors[11299456].message }}
  • Profile picture of the author Alex Cohen
    Claude,

    These posts you've been making are excellent. On par with information one would usually find in a well-written book.

    Thanks.

    Alex
    {{ DiscussionBoard.errors[11299759].message }}
Avatar of Unregistered

Trending Topics