Make Your Price Sell!, The Masters Course | Page 9

off the regular price. Send these supporters to a
special discount URL. Do the same for your affiliates. Both deserve it. They’ll
appreciate that you appreciate them.
Quantity discounts are really worth considering, especially if you are shipping hard
goods. Go beyond the obvious reduced “per unit shipping charge”... offer “three
for $20” (or better, $19.95) for that $7 bottle of wine.
Sure, the margin is a bit less... but your gross is much better. Your customer saves
on shipping, product cost, and gets that “under $20 psychological boost.”
And your competitor?... well, that’s two bottles of wine that he is not selling to your
customer!
Discounting can be used in a variety of other ways... for seasonal deals, special
markets like seniors and students, affiliate (or distributor if you are offline) network.
Whether you use it to build existing customer loyalty, for quantity savings or for
competitive reasons, discounting can be a strong tool. Define the goal clearly,
though, before you discount. Otherwise, you’re just giving money away.
4) “Reverse Discounting”
“Geez, it has to be good -- look how expensive it is!”
Quality is in the eye of the beholder. And a high price tag can certainly help
create a high perceived value. After all, is Mercedes really worth three times a
Ford? Is a Tiffany’s diamond really worth five times more than the same one on the
Net?
This can work if you are selling the snob appeal of a status symbol to the wealthy, or
a high-priced, big-name service to multi-national companies. But don’t try this for
most products on the Net, especially if you sell digital products -- unless, of course,
you enjoy...
... the feeling of your head being clamped in a vise.
If you simply set a high price for a new product with the hope of increasing Net sales
due to a high-perceived value, you’re headed for pain. Big time pain.
Yes... if your site makes a great sales effort, you will be able to build a higher
perceived value. And that will support a higher price.
Whatever that value is, when it comes to selling on the Net... never price beyond
the value that your Web site creates and that your product supports. This
is essential knowledge if you want to build a successful, growing, long term
business.

Make Your Price Sell!, The Masters Course
23
5) The Infamous “Plus S&H”
“Plus shipping and handling”... That famous phrase! Everyone’s aware of these
hidden charges, of course. But somehow S&H are just not part of the price.
Let’s say that you charge $39.98 for a Crocodile Dundee knife. Plus, of course...
Shipping & Handling of $9.98
So, Mr. Smith, what does that knife cost? $49.96? No, by the time Mr. Smith has
decided he must have the “That’s-Not-a-Knife-Now-That’s-a-Knife” knife, it only
costs $9.98.
Including S&H in the price of your product is a big boo-boo. It can only mean one of
two things...
1) Your product looks $9.98 more expensive… or...
2) You’re losing money. You can only do that for a while. If you build customers on
the basis of price, be prepared to lose them when you have to start making money.
We should add one warning. People do notice S&H if you gouge
them. Don’t make a profit on S&H -- just cover your costs.
Naturally, if you’re shipping digital products directly via the Net, S&H are free! In that
case, sure... be generous.
Tell your customer...
“Shipping & Handling Included.”
6) Price Elasticity
If demand for your product drops when you increase the price by only 1%, you
have a product that is very price-sensitive or price-elastic.
If, on the other hand, doubling the price only causes a slight drop, you have a
price-inelastic product -- that means that it almost doesn’t matter what price you
charge because people will still buy it.
Elasticity is largely driven by customer perception of your product and the
competition.
If you are a grocery chain selling your own brand of instant coffee, your coffee better
sell for less than other brand names. Bump the familiar price up and watch your
inventory sit on the shelves.
But if you sell a top-line, in-fashion, gourmet brand of coffee...

Make Your Price Sell!, The Masters Course
24
... it can be a license to print money.
What kind of products are price-inelastic?
Products that...
• deliver important benefits to the customer.
• offer uniqueness that is understood and valued by the customer.
Take-home lesson?
No matter what approach you use, it has to “ring true” to your customers. They will
only be attracted to your price and product, if it’s worth it to them. As Sam said
back in Chapter 1… your customer must profit from you.
That’s why you need to “know” your target group. Who are they? What are their
needs? What wishes are they trying to fulfil or what pain are they trying to solve.
Do you know? Let’s see how you can find out…

Make Your Price Sell!, The Masters Course
25
6.