Nobody likes cheap products, but EVERYBODY LOVES A BARGAIN.
I’ve just finished reading Claude C Hopkins’ Scientific Advertising. This is what Drayton Bird, the world renowned direct marketer has said about Scientific Advertising:
“the shortest Chapter is called Just Salesmanship. If you read it you will know more about this business than most of the people in it. If you act on its lessons, I guarantee you will get better results.”
Get your free copy from here. This book is great! The concepts in Scientific Advertising can be applied to market any product or service. There are loads of meaty topics in this book but my post today will focus on the pricing. In this book Claude basically said that “cheapness is not a strong appeal. Americans and everybody else is extravagant and want to feel that they can afford to eat, have and wear the very best. Treat them as if they could not and they resent your attitude”. This is so true! I can’t believe this book was written in 1923, this observation is still true today. The whole world wants to live in luxury hence the credit crisis.
Another reason you shouldn’t price your products too low is that nobody wants to be called a cheapskate. Yes they don’t want to pay a lot but they also don’t want to be seen as cheap so the trick is to make them feel that they were getting something of higher value for less. Groupon, Lastminute Network Limited, TK Maxx and other businesses are capitalising on this need. I know this marketing tactic has worked on me in the past and continues to work on me. The reason it works so well is because I love a good bargain. Like many people out there I find it very difficult to walk away from a bargain. I will convince myself that I needed a product or service if I felt it was an amazing bargain.
Thirdly, people judge a service or product largely by its price before they decide whether to buy it or not. Do your homework and make sure that your price point is sending out the right message. Your price should give your customers assurance over the quality of your products or services.
Next time you are tempted to reduce your price, think of all the potential customers you may be alienating simply by pricing your products and services TOO LOW. I’ve been guilty of this in the past and I think I still make this mistake every now and again. As a business owner you should aim to reduce the uncertainty in your marketing (pricing) by measuring the results or response of each marketing campaign.Run surveys, speak to your customers about your products and pricing. Find out what they think about your pricing compared to the competition.
You must learn which actions and effects get your customers to respond in a certain way and thereby use this knowledge to increase your sales. Mistakes are a fact of life so embrace every mistake as a learning curve and keep trying until you find your winning pricing formula. If you want to sell really cheap products then by all means make sure there is a viable market to support the volumes needed to make a profit.
Remember to make your customers feel like they have got a bargain and they will come back for more. I know I would. Its always great to get feedback, please leave a comment or share your personal pricing experiences.