Are You Really Sure about that Price?
This is the first installment of a 3 part series in which I’ll be discussing the cost/value association and why most of the time, perceived value has nothing to do with the product itself. Enjoy!
I’ve been paying to product launches for around 2 years now, and throughout this time I’ve seen products launched at anywhere between $7 and $10,000.
What’s interesting about this is that some of these $7 products were worth far more than a few dollars, while some of the $2,000 products were worth much less than the price they were asking.
But I don’t think that matters, and here’s why…
It is my theory that the content of the product actually has nothing to do at all, with the value of a product.
How can this be? Surely there’s a correlation between product content and perceived value right? I mean, a $2,000 product should definitely be better than something that sells for $500…shouldn’t it?
I know it hurts to hear this, especially if you’ve purchased a lot of high dollar products, but the answer is no…not always and quite honestly…not very often.
Why Value isn’t Content Based
So here’s the deal…I believe there are 3 ingredients in the formula of perceived value, and we’re going to go through them one at a time.
1. Price
This one should already be obvious, and it’s the simplest one to discuss.
As consumers, we automatically assume that a higher price tag equates to a better product. We believe that high prices are equal to high quality.
At a store near you
It’s why name brand clothing sells better than Wal-Mart clothing. It’s why a fancy steakhouse can charge double what a casual fare steakhouse can. It’s why an iMac costs twice as much as a PC.
Sure, there are times when the quality of a product matches the price, but not as often as you’d think. For instance…the quality of a Wendy’s hamburger is better than that of a McDonald’s hamburger, and as such, people don’t mind paying more.
But I’ve paid for name brand clothes that fall apart within months, while some of my sturdiest and longest lasting jeans were bought on clearance at Kohl’s.
In the Content Marketing Game
I paid $27 for a course called “Get Money From Google” that was one of the best marketing courses I’ve ever purchased. On the other hand, I spent $2,000 on Mass Control and received far less value.
But here’s where it gets interesting…
You’d think that when this happens that people would get upset. But usually it’s the opposite that happens. In an effort to feel good about their purchase and not get disappointed, many people will find a way to rationalize the price of high cost items.
They’ll say…”well, it’s Frank Kern, and he’s making millions…so yeah…it’s definitely worth $2,000.” They’ll watch the videos 10 times in order to extract value that wasn’t necessarily there in the first place. They’ll lie to themselves so that they don’t feel guilty for buying it.
On the other hand, for some reason, when people pay $27 for a product from someone they might not have heard of…they’ll complain about the value.
“27 bucks? For this $hit? Gimme a break!”
Price Chooses Customers
And that brings me to the next point, which is that in setting your price a certain way, you attract a certain type of customer.
When you charge $7 for something, you are going to attract customers that are tight with their money and that hate spending money on info products. But if you charge $700 for the same thing, then you’re going to attract people that are willing to invest and realize that they’ll also have to put in some work to become successful (getting them to do the work…that’s another story).
Creating an Association
When Andy Jenkins sells Video Boss for $1997, he’s implanting a high value association in the minds of his customers, and in the process, he’s attracting a group of people that don’t mind spending a few grand.
Were he to charge $197 for the same course, he might’ve sold more (doubtful), but I guarantee you that his refund rate would’ve been higher. Why?
Because people that buy higher priced items are a different type of customer than those that take a few hours to make the decision on a $197 course, regardless of how much money it could make them in return.
On the other hand, a $2,000 price point creates buzz, exclusivity, and a desire to be “part of the club.”
Buying is Psychological, Not Rational
None of this has to do with content, which is why marketing is much more psychological than it is rational.
When you set the price, you set the value and in doing so…choose the customers that you want to work with.
That’s why $47 for Beyond Blogging worked much better than $17, and it’s why I sell my premium Claiming Your Destiny guide for $9.95 instead of giving it away.
There aren’t any absolutes
Lastly, I’ll mention this only because if I don’t some of you might get upset and think I’m bashing you or your favorite products.
Yes, there are many different types of customers, and just because you are one today doesn’t mean you won’t be another tomorrow. It’s nothing to be ashamed or afraid of…it’s just the way it works.
Also, this isn’t an excuse to overprice products or to provide low quality content. It also doesn’t mean that the products mentioned in this post aren’t good…I’m just using them as an example.
The point I’m trying to make in all of this is that sometimes, it’s better to raise the price than lower it, and if you are trying to get to the next level in your business, you will need to get comfortable doing that.
Still not convinced? Well, in the next installment of this series, I’ll cover the 2nd way to increase perceived value, which is in the launch itself.
Recommended Posts
Like what you see here? Click Here to check out my guides and courses or make it simple and Hire Me. Also, please leave a comment and click that cool RT button. Thanks!
PodcastDigital Empires Radio - How to Build an Online Business Empire
Digital Empires TVMy take on good marketing and the future of platforming
Consulting ServicesFind out how I can help you make more money doing something that you love
iPhone AppsThe next phase of expansion - mobile apps and software.
