What should you really be charging?
A few weeks ago, I talked about testing sales approaches and other vehicles of marketing. Today I want to talk specifically about “Price Testing.”
You should always be testing your prices. Different prices can often outperform one another on the same product…sometimes by enormous margins.
I have seen where $17 outperformed $25 by 300%, or $147 out-pulled $97 by a huge margin.
You might be asking yourself the question, “Why does one price out-pull another?”
There are lots of theories about that. To be honest, I can’t say with certainty. But here are a couple reasons…
It could be the psychological image that the customer has regarding the value of the product. Or, it could be the perception the customer has of the quality of the product or service.
Since you are not certain about what’s going on in the customer’s guarded mind assessment, it becomes important to test you r price. Testing helps you learn how the customer sees your product. Without it, you could be leaving a lot of money on the table.
Every situation in price testing is different and unique. This is why I implore you to test different prices. You will be amazed at the difference in profit one price will produce versus another.
Testing applies to every aspect of marketing.
If you put ads in newspapers or magazines, test different approaches, different hot-button statements, different rationales, different headlines, different packages, and different prices. You get the idea.
You should make specific offers and analyze the number of responses, prospects, and the resulting sales for each ad.
Most business owners stop here.
You however, must go beyond this point and compute the cost-per-prospect, cost-per-sale, and the average profit-per-sale against the “control” you have in place. This will reveal which one works and pulls better than the other. The one that pulls better becomes your new control.
Remember, an ad costs you the same amount of space or air time whether it produces 100 prospects, 1,000 prospects or 10,000 prospects.
Doesn’t it make sense therefore, that you should test different ad approaches to find those that work better than all the others…and then use those approaches to maximize your marketing investment? Of course it does.
So, starting “Right Now”, test your pricing using the approaches and measurements I just mentioned, and let me know the results you get.