Strategy: The Price Is Right … or Is It?
Perhaps it's obvious, but any marketer using a price-driven marketing program should test very frequently to determine the ideal price point.
Dr. Marlene Jensen of PricingStrategyResources.com is one of the foremost authorities on direct response pricing. Author of "46 Ways to Raise Prices without Losing Sales!," "The Tao of Pricing" and "Pricing Psychology Report," Jensen has discovered many instances when test results defy conventional wisdom and create profit-building opportunities.
Tests suggested by Jensen's research include:
- Test different prices in different market segments. This can be done with techniques as simple as offering a discount to one segment and withholding it from another.
- Test whether your customers react to "magic numbers" in prices. Testing a price ending in a seven versus one ending in a five ($19.97 vs. $19.95) may sound trivial, but test results have shown up to a 10 percent variation.
- Increase your published price, and offer a discount.
- Test the consumer's favorite price point - FREE - by adding a premium to your offer.
- Test a "beat the price increase" offer. This works great when you've announced an actual price increase on a date certain. But it can also work to say, "Our costs are increasing, and we can't guarantee the current low price indefinitely. Order today while you can still lock in today's prices."
Of all the variables that go into the success or failure of any marketing campaign, price is perhaps the easiest to test - and often proves to be the easiest way to boost profitability. In an economy where almost everything seems a lot harder than usual, this is a great time to be testing prices.
Mark Everett Johnson is a freelance direct mail copywriter and author of one of the most successful letters in the mail today with more than 3.6 million units sold. He can be reached via e-mail at firstname.lastname@example.org.