Intriguing stuff reported in the Wall St. Journal – stuff we all know – but do you use it in your own sales strategy? Here’s an excerpt:
How Luxury Brands Alter
Shoppers’ Price Perceptions;
Buying a Keychain Instead
“The question weighed on Barry Schwarz as he scanned the racks at Boyds men’s store in Philadelphia, which were laden with $3,000 Brioni suits. “Their prices were just out of the world,” recalls Mr. Schwarz, a professor of psychology at Swarthmore College….
“Some people cut and run when confronted with prices that seem crazy. But many of us experience a sudden emotional-mathematical transformation. We set a new ceiling for a “reasonable” price. Disinclined to go all the way to buy the trophy, we instead settle for a consolation prize. Mr. Schwarz, a jeans-wearing type, walked out of Boyds with a suit that cost merely $800 — the most he’d ever spent on an item of clothing.
“If you’re in that world long enough, $800 stops even feeling like a lot of money,” Mr. Schwarz says.
“This concept is one of the reasons for the proliferation of $300 designer sunglasses these days. The fact that Ralph Lauren is charging $14,000 or so for an alligator “Ricky” handbag makes it easier for a consumer to justify in her mind paying $300 for a rather simple sweater. Many Chanel sunglass owners are actually would-be owners of Chanel suits. Something similar has happened to many owners of Tiffany keychains, Prada legwarmers, Coach wallets, and Frette tea towels…”
-PDF of entire piece here
Do you know how to use this high-to-low strategy when the prospect asks, “How much is it?” (Either for the product or the business start-up cost). Or…
Next post: Do you sell the product cheap just to make a sale?
If you sell a product cheap just to make a sale, it doesn’t only show that you are desperate, it also lowers the value of the product itself. Not a good idea.
It would be much better to offer a smaller package/bottle or a sample.
Or if it was someone looking at the business, offer a smaller startup package like Suzanne did with her new enrollee. Way to go Suzanne!
“Perception is reality.”
“A sale is made when the value of your product (to the customer) exceeds the cost by 1 cent.”
I love it and it’s so true of my own shopping behavior! As you teach in your books and audio trainings, the answer to, “How much does it cost?” is, “It depends…”
One tip I would offer as a certified hypnotist and practitioner of persuasion and influence is to substitute the customer’s word “cost” or “price” with the word “investment.” Nobody likes adding more costs to their budget, especially if it’s a recurring monthly cost. Everyone likes making wise investments.
When a customer buys my nutrition supplements, they are investing in their health. When they join me in my business, they are investing in their financial future. In either case, when presented in that light, the “cost” is almost irrelevant.
Love your work, Kim!
Guilty as charged. I have indeed done that with retail sales. Not very clever, really. Thanks for pointing it out and for all the other priceless education.
“It depends on……” there are several choices depending on how the conversation is going. You can offer a package of products which of course is cheaper than buying them individually or buying them individually over a course of time or why not start with the travel pack to see how it works for you?
I add in there on how bought the product and give them advice to suit their needs and sum it up with what if it works for you like it did for me?
Kim asked “Do you know how to use this high-to-low strategy when the prospect asks, “How much is it?” (Either for the product or the business start-up cost).
About a hundred years ago when I tried (briefly and mostly unsuccessfully) a stint at radio advertising sales, we were taught to offer the prospect three “packages”. The idea was that if they took the middle package the transaction was a complete success. If they took the highest package, you under-estimated them and would have bought more. If they took the low package, at least you made a sale.
P.S. Hope this works since it’s my first post after lurking for many months!