Are Low Prices Keeping You From Earning Real Money, How To Tell If Price Is Right?

2 February 2020

8 min read

Price or Result Shopped?

Are you offering people a price-shopped product or service, or one that is result–shopped? The distinction is critical. Price-Shopped items are essentially commodities – EVERYDAY THINGS (petrol, milk, water, sugar for example). The majority of people buy EVERYDAY THINGS wherever they find the lowest price. Period.

But a RESULTS-SHOPPED items are totally different. What if customers/clients/patients are looking for a particular result – a sense of fulfillment or inner satisfaction? In this case, you as an affiliant have much more flexibility, and a better chance to make a nice profit. Our recommendation is to always try to move your business toward the RESULTS-SHOPPED product categories and away from the PRICE-SHOPPED crowd.

CASE 1: Petrol Chains Stations

Here’s a CASE 1: chain of petrol stations in Australia dropped their price a penny below the competition price. They volume massively increased. But, that wasn’t the real beauty of the story. The “beauty” was that they had shops in their stations and, with extra traffic attracted by the petrol markdown, they were able to sell many more products…

Bingo: Profits increased by $900,000 in 3 months!

As people came inside to pay for gas in the morning, they would pick up coffee, milk, and other items that the staff called their attention to. Petrol and milk are price sensitive. If something is heavily price-shopped, offer a bigger package. If everyone is selling a gallon of something for $1.8, don’t sell single gallons alone. Pack 5 gallons together at AN INCREDIBLE PRICE – a price where you can get a purchasing advantage in quantity, and one you can use to make a GOOD PROFIT while offering your customers SUPERB VALUE.

But in general, refuse to compete on a commodity basis and STAY AWAY FROM THAT KIND OF BUSINESS.

CASE 2: Pain

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.

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