Here’s a case 2: Imagine you suffer from knee pain – no matter if it is a sports injury or a condition that comes with age. Within 3 months, you visited several specialists, had a few sessions with a physiotherapist, spent a lot on drugs, and yet the pain keeps coming back…

How much will you pay to get rid of the pain?

How much are you willing to pay to solve your problem? Would you believe that a € 25 product would be EFFECTIVE – or would you rather go for something HIGH-END, say, € 250?

Customer Perceived Value and Price Sensitivity

We call it customer perceived value and price sensitivity:

• EVERYDAY THINGS – they have low perceived value and are price sensitive. Even a slight increase in their price will cause a significant drop in sales. You cannot charge more than the market average for them.
• RESULTS-SHOPPED – they have high perceived value and are not price sensitive. The price increase does not cause a significant decrease in sales. Paradoxically, in many cases, an increase in price causes an increase in sales. The customer perceives a more expensive product as better. In his mind, a higher price is a guarantee of effectiveness.

RESULTS-SHOPPED model

Thank God, affiliate business bases on RESULTS-SHOPPED model… We avoid selling PRICE-SHOPPED EVERYDAY THINGS. Also, we can always test our prices, in case we might discover that we are underpricing out of sheer, unreasoning intimidation.

There’s a great story that makes that point in a book called Influence, by prof. Robert Cialdini.¹ He wrote about a retailer who sold turquoise jewelry in a gift shop in Santa Fe, New Mexico. The jewelry didn’t sell well. So, the owner decided to cut prices and blow the jewelry out. Before going on vacation, she left a note telling her staff to cut the price of everything by ½ while she was away…

But the staff member MISREAD THE NOTE. He marked prices up, not down. When the owner returned from her trip, she was amazed to find that every piece of jewelry has been sold… WHY?

Because the prices she had used before weren’t in synch with the jewelry’s PERCEIVED VALUE.

See the moral?

TEST, TEST, TEST. Every concept, technique, and strategy should be tested. Thanks to them our position prices right. The market will always tell whether or not you made the correct choice.

In our IN-HOUSE TESTS I’ve seen higher prices outpull lower ones by as much as 400%, but I have also seen lower ones outpull higher ones by a similar margin. WITHOUT TESTING, YUU’RE GUESSING.

At our marketing lab, we are working to rather stretch an expand value proposition than lower prices. We have got a surprisingly large number of repeating business from the existing client base because they perceive high product value through their price lenses.

Unless you’re willing to price in an innovative, proactive, and inventive way, you’ll be at risk of selling products at less than you pay for them. You’ll also be at risk of FALLING OUT OF BUSINESS.

Most business people fight price wars just to generate customer traffic. But unless you have A WELL-STRATEGIZED PLAN of action behind what you’re doing, you can’t possibly profit from a price war. In fact, in most price wars, nobody wins. The same with low price strategy – sooner or later you’ll go out of business…

Instead, we shift or “pump” perceived product value and add the “magic” component in pre lander and landing page copy.

Don’t Psych Your Own Prices Down

They may be tough, but most customers, clients, or patients won’t deny you the opportunity to make a profit. More often than not, we PSYCH OURSELVES DOWN the price scale, which is suicidal.

Wouldn’t it be sad if you found out next month or next year that you had been denying yourself 50% more profit just because you were afraid to promote offers with high price points?

I urge you to MAKE AN EXPERIMENT… For the next 30 days try to promote only the most expensive offers on our platform. Then do the match and compare the outcome with your last month results. After that decide which approach is in sync with your traffic characteristics. Affiliate business is a NUMBER GAME.