As I’ve stated before, in the prior edition of the competitive pricing strategy post…
Competing solely on price is 3D: dumb, defeatist, and dull.
Dumb in that it doesn’t work for premium or luxury products.
Defeatist in that it can lead you towards a race to the bottom.
Dull in that it lacks creativity, as it’s the first thing most people think of.
So picking up where we left off? Reasons 4-6 of why it really is 3D….
Reason #4: Your Brand Looks… “Let’s Say, Low-Value/Status” When You Sell Cheap Crap Without a Competitive Pricing Strategy
When you’re out there trying to sell cheap stuff to your audience, they usually don’t value it very much.
Ever heard “we never value what we get for free”? It’s true, and rings especially true for cheap stuff.
It’s because you look like you don’t have much value packed away in whatever you’re selling. If you sell some electronic device, the lowest-priced product in the market alarms the bells of a scam or knockoff.
I’ve strolled through countless markets across Asia to see Rolexes and Coach bags for $20-50… Pretty cool, where do I sign up?!
Selling low-priced product triggers the mental heuristic that it’s low-value.
This was covered extensively in Cialdini’s Influence, and in my article here.
It can be false and misleading, but if a product is low price, people automatically are triggered to believe it’s also low-quality, low-value, and low-efficacy.
As I’ve said before here, you will get infinitely more value out of an expensive pack of information or instructions than you would the same info at a cheaper rate.
Why?
Because it pangs the wallet. It hurts a bit. In fact, when you can get it hurting so much, you’ll get to a point where you want to make it back.
You want to put your knowledge to actual work. To make it “pay its rent”.
And, when knowledge is clogged up in your brain as theory, and it’s not motivated enough to find its way out the other end and into work…
You stagnate.
The same happens to your customers whom you sold low-price, low-impact stuff to. As mentioned in the article on copywriting tips for beginners, if you sell them something that could change their lives, it usually won’t if it’s low price.
Because without a good competitive pricing strategy, they won’t apply it, and that’s partially your fault. Now, to make it clear, everyone is 100% responsible for creating their own results in their lives.
If a customer writes in to you and complains about your product not working, or being a scam, as long as you’ve provided real, honest, and battle-tested information for success, you’re clear.
You’re not responsible for the results of your customers entirely, because there are infinite variables. That said, your product should absolutely work for the small tenacious minority that apply it until they see results.
The unfortunate reality is that somewhere between 80-90% of people will buy a personal improvement or business product, even expensive ones, and yet do nothing with it!
This can be information or physical products. How many people do you know with exercise equipment in their house, dumbbells, medicine balls, yoga mats, that have a quarter inch of dust each?
I’d gander a ton.
This is because they were sold by effective copywriting techniques, sales and pricing methods in marketing. They saw their potential future with these items. Yet the day they arrived, they didn’t apply any of it.
The yoga mat sat there and collected dust.
The dumbbells ended up being door-stoppers.
And the medicine balls? Nice rainbow-colored garage decorations…
Sad? Yes. But also totally avoidable.
Now, without getting too deep into why people don’t get the results they’re after, the biggest reason is…
Reason #5: People Fail to Get Results Because of Their Own Daily Disciplines (or Lack Thereof)
When you form a daily habit, it’s hard in the beginning, gets easier, then it becomes permanent.
It’s awkward and very tough to choke down your first cigarette (I’m told). Your intelligent body coughs up the rat poison and cyanide and screams:
“What the hell, man?! What are you trying to give me?”
Then, if you keep doing it it will become a little more normal and comfortable.
Coffee and cigs in the morning? Sure!
Feeling nervous or stressed? Step outside and have a smoke!
Then 20 years passes and you look like hell, your lungs are blackened, and you’re on oxygen tanks.
Nice. Congratulations, you played yourself!
The same goes for uncomfortable success disciplines. You get up one time at 5 or 6 a.m., work, exercise, or read ten pages of a book, but you keep falling asleep after every page turned.
Then a week goes by of forcing yourself to do it, and after a month you’re practically springing out of bed, ready to crush the day and complete the successful habits that permanently alter your life.
Not to mention, at this consistent pace you’re reading anywhere from 2-6 books every single month, and being able to see the world in a new light.
This all translate to a new thought paradigm, sharper, clearer thinking, and of course, different actions that bring different results.
The same thing happens when these customers buy the cheapest option, and there’s no discomfort or pain driving them to do more…
You can and should make it as easy as possible for them to implement and develop daily discipline, but it’s mostly on them.
However. When you sell the cheapest option, competing on price, you’re often doing customers a disservice.
You’re catering to the part of the market who usually has lower income, is looking for quick fixes, and is the most likely to do nothing with it.
This segment of your market is the one that also expects the world on a string, for pennies in return, but that’s another story. The moral of this fifth lesson? When you make the price sting a little bit, their attention is localized where it should be.
But does just pricing something arbitrarily high make people spring to action and stay consistent? Hardly. But when people make a bit more of a measured decision (emotionally first, then logically committing)…
They have a higher chance to win.
They want the product to be worthwhile, so they apply themselves more and get far higher results, strengthening their own feedback loops.
Reason #6: Pricing is Part of Your Brand Strategy & Market Positioning; How to Conjoin Copywriting & Positioning in a Stage 5 Market (Using Identification)
Using price is one part of a powerful positioning strategy.
Recognize that is is not the entire positioning strategy… Usually.
Have many brands priced far above their competition with an inferior product, changed nothing else, and won?
Sure.
But have those same brands lasted very long? No.
Your objective should be to last and bring consistent value. You’re going to want to roll pricing into your arsenal of positioning weapons to deploy.
Pricing that triggers the high-value heuristic must be aligned with a few solid concepts. These concepts back up the elevated market position you want to enjoy.
You don’t need every single one of these at play, but usually more is better here:
– Consistent branding with a definite theme
– Results from past clients or customers, who are similar to your target (only revealed via market research and insights)
– Convincing celebrity/authority endorsements
– Premium tone and style of copywriting and advertising
… and when you roll them together, with a succinct competitive pricing strategy that accomplishes one purpose, the results are phenomenal.
In fact, they’re the most powerful when you leverage them onto a market in Market Sophistication Stage 5.
This market is so aware, so jaded on every possible solution, competitors and offers, that they need a rare form of marketing to be convinced:
Identification.
They must identify with the right brand that portrays their lifestyle, (and perhaps even their desired lifestyle) that they don’t yet live.
Shhhh…
The last one’s a very powerful secret, so don’t tell anyone! This is because you’re guiding them with your marketing and competitive pricing strategy, to step up a level and embody the person they’d like to become: the person they dream about.
Now you’re hitting on unconscious ambition desires, and escaping from current undesirable, painful realities. And that’s powerful; use it ethically.
Identification is almost a necessity when you play in level five markets like toothpaste, deodorant, fishing rods, board games, cars, watches, etc.
Products in this market are so ubiquitous that selling them the old way, with high claims, promises, mechanisms, and hooks usually don’t fire.
What fires is personal Identification with the product, brand, and style.
Consider this your task if you find yourself in a Stage 5 market. Learn all about the separate stages of markets and how to take marketing aim at each of them here.
You Can Have Your Cake & Eat It Too… How I’ve Positioned & Priced Products in Countless Markets And Won (Even With Higher Prices)
Ever since I began drop-shipping, my first business was targeting slightly older, higher-income customers.
My first drop-shipping store sold items at over $1,500 on average. Since then, I’ve taken on multiple clients who had drop-shipped products between the $2000 and $5000 product range, in a variety of different markets.
Then, when I moved onto private-labeling my own products, I served a market I knew very well. Because of this, my:
– experience,
– branding,
– product quality and imagery,
– alleviation of pains through product solution,
– sales copy and tone, and
– positioning and pricing,
… all set me up to charge over DOUBLE what every competitor did.
You read that right: over double.
I rose to the top of the market and dwarfed the sales of my competitors.
Since then, I’ve taken on a plethora of private-label clients who make their own E-commerce and physical brand products. My copy and marketing approaches have slain the market at premium price points there too.
You can have your cake and eat it too!
People think when they slash their prices, they’ll get floods of new sales coming in. Not quite true…
Or if it proves true, they usually aren’t the types of customers you want. Refunds, complaints, and negative feedback can soar.
When you do this, you may think more people will buy, but you’ll naturally be attracting a different market segment, with a separate competitive pricing strategy, than the market you previously targeted!
You can attract this lower segment of the market, and you might even get more sales.
What you hardly ever think about though, is the spike of sales being inconsistent, attracting more refunds and chargebacks, and a higher level of hassle from customers, as previously mentioned.
Think about it.
If you had to bust it at work, the equivalent of three 8-hour shifts in a row, to pay for the $60 headphones you just bought, you’ll be expecting a lot out of them.
They are extremely high-value to you, hard-won, and you won’t give up that kind of cash lightly.
But if your business is pulling in $3-500 a day, you can buy those new $250 headphones, and if they’re not the best in the world, eh. No worries! You can chuck ‘em, or hand them off to somebody else and it won’t change your life much.
You probably won’t be super happy about it, and you might get in contact with customer service, but the entire mindset is different.
There is a big difference between each market level and customer segments.
But when you target them right, and give them what they need, you can win at almost any price point.
Perception Is Reality (Continued) – What Value Can Really Mean to a Customer
Everyone does things for their own reasons. Their own benefits. Their own pleasure gain or avoidance of pain. It’s hardwired into us.
One person defines value far differently than the next guy or gal.
And who are you to determine what value represents to them?
Here’s a small list out of all the options for value…
To some people, product value/efficacy could mean:
– Entertainment – Something funny, fun, cool, or enlightening
– Information / Knowledge – Something actionable, helpful, challenging, or provoking
– Guidance – Mentorship, avoiding pitfalls, or getting a leg up
– Exclusivity – Buying something because they CAN and you CAN’T! (Yes, really)
– Results – Advancement, accomplished ideas, momentum, or purpose
– Unique quality – Something that nothing else has, represents, or offers
– Unique quantity – An amount or deal that is found nowhere else
– Brevity – Brief digestion of ideas, food, or supplementation
– Saved Time / Effort – Something that chops two months off your life, or somebody who does XYZ for you, rather than you needing to do it
^
* HINT HINT * – Markets like this who are willing to “buy time” are people you want to talk with, share mindset with, and sell to. They think like investors – they DON’T care about your competitive pricing strategy or discounts.
There are literally hundreds of reasons people buy things, each reason as unique as the individual. They get even more complicated when others are in the mix, and status considerations come into play.
Conclusion to Competitive Pricing Strategy: Don’t Shoot Yourself in the Foot by Competing On Price! The 6 Reasons Why Summarized:
There are some (SOME!) scenarios when it’s okay. However usually, you’re going to want to go against the crowd when building out a custom competitive pricing strategy.
So much advice, and even our natural inclinations push us to head down this route, yet it’s stupid.
Don’t be stupid. Apply these 6 strategies in your premium pricing:
#1: Competing on Price is Akin to Asking Your Neighbors How They Designed Their Living Room, Then Modeling It Exactly
#2: Competing On Price Reduces You to a Commodity Rather Than A Valuable Brand
#3 Competitive Pricing Is Stupid: Markets All Have Relative “Expensive” Price Points
#4: Your Brand Looks… “Let’s Say, Low-Value/Status” When You Sell Cheap Crap
#5: People Fail to Get Results Because of Their Own Daily Disciplines (or Lack Thereof)
#6: Pricing is Part of Your Brand Strategy & Market Positioning; How to Conjoin Copywriting & Positioning in a Stage 5 Market (Using Identification)
Conclusion
Come up with your innate creativity, to birth something into the world that’ll change people’s habitual modes of doing things.
Something that will encourage them to improve themselves, and that will sting their wallet enough for them to get a positive end result by way of application out of it.
If you’re not sure how to start pricing your products, how to target people, or switch up your tones when writing to different markets…
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