The Incredible Value of Price Testing
Many years ago, I learned a memorable lesson from an old friend I worked with, one of America’s top seminar marketers, Doug Hall. Hall had just taken over a number of troubled Evelyn Wood Reading Dynamics (speed-reading) franchises and was determined to quickly and dramatically turn these losing territories into heavy-duty money-makers. One of his earliest decisions was to have an enormous effect on the success of the company. (Hall’s shrewd marketing thinking was ultimately responsible for his becoming Evelyn Wood’s president and chief operating officer.) Here’s the story …
Hall took a look at the $195 seminar price and ordered an immediate price INCREASE. Needless to say this caused some consternation among the people who actually had to sell the course. Many salespeople argued that it would be an impossible job and even encouraged Hall to cut the cost of the seminar. Hall explained that the key to real financial success depended on the company floating the price upward until real sales resistance was met.
The $195 price was raised by $50 (in a media-isolated test market) and the results were remarkable. Sales actually went up as the price increased! (Due, perhaps, to the perception of greater value for a higher price.) Another $50 price hike was instituted and again sales continued to climb. Prospects didn’t even flinch. To make a long story short, Hall floated the price up to … get this … $395 before he hit resistance and had to back off! In other words he doubled the price of his product without any negative effect on sales! Not bad.
When Hall took over Smokenders years later, he did the same thing and again floated the price up and up until the marketplace inevitably told him to cool it. How about YOUR product or service? Are you pricing it too high or too low? The only way to find out is to do a little testing and get some solid answers.