Sunday, 12 July 2015

How to Price Your Product so Your Prospect Says Yes (Yes!)

a pricing strategy to get to yes faster
It was the year 2003.
I was in Australia speaking at my first marketing conference.
Well, not quite. It was billed as a marketing conference, but it was really a pitch-fest. The speakers delivered their speeches, and then sold their products from the podium.
And there was one speaker who literally got people pushing and shoving each other to get his product.
So what caused all the pushing and shoving?

The “yes-yes” system

It’s a concept called the “yes-yes” system.
When you’re selling anything to your audience, there’s a pretty good chance that you’ve got a single price — a single “buy now” button.
Your audience is therefore faced with the option of choosing “yes” or “no.”
The “yes-yes” system consists of two offerings: a “regular” and a “premium.” Instead of choosing between “yes” and “no,” your clients have to choose between “yes” and “yes.”

Why do they “have to” choose? Why can’t they just leave?

Let’s say you step outside to buy a coffee. The cafe gives you two options: a regular (at $4.00) and a premium (at $4.40).
There’s no difference between the coffees, by the way. They’re both exactly the same size, the same type of coffee, and have the same taste — in short, they’re so incredibly identical you could swap the cups of coffee around and no one would know the difference.
There is one difference, however.
While the coffees are the same, only one option has a bonus.
With the “premium” coffee, you get a tiny, scrumptious muffin.
Now your brain is no longer focused on the coffee; it’s focused on the muffin.
You do the math and figure out the “regular” costs $4.00 (and brings you a value of $4.00), but the “premium” costs $4.40 (and brings you a value closer to $5.50).
It’s a no-brainer, isn’t it? You simply choose the “premium.”
You choose the “premium” because of the bonus.
Not just any old bonus — but one that is so powerful, so lovable, so desirable that it is completely impossible to ignore.

The value of the bonus in action

Let’s head back to that conference in Australia to see the value of the bonus in action.
The product alone didn’t have all those folks jostling and shoving.
The “regular” offering was just the software the speaker was selling. The audience members were interested in that software, but the moment they heard of his “premium” offer, the shoving began.
His “premium” option was that he’d personally install and test the software on the clients’ sites.
Clients are always looking at the value. They’re always looking to get more bang for their buck.
It’s important to remember that the “premium” should always be between 10-15 percent higher than the “regular” — never more!
The reason why this works is simple: When the price is just a smidgen higher, the client doesn’t feel too much of a pinch. The moment the price rises beyond 15 percent, all bets are off.
Suddenly, the client sees the “premium” option as a completely different product or service.

The bonus is at the heart of the “yes-yes” system

Let’s take a bit of breather and review what we’ve covered:
  • We take two products or services and display them next to each other
  • The two products or services should be identical in every way
  • We add an irresistible bonus to the “premium” offering, one that has immense value
  • We put prices on the two offerings — the “premium” should be about 10-15 percent more than the “regular”
  • The 10-15 percent difference is crucial — you can’t violate this principle or the client will see the “premium” version as a completely different product
Now, let’s say you’re hosting a small seminar on how to do remarkable podcasting.
The “regular” option gives participants all the information they need to know about the topic. But the “premium” includes a visit to your studio to view your setup.
The move to “premium” is almost instant.
You may think the participant would choose the less expensive option. After all, his goal is solely to understand the concept of podcasting — no more.
But if the price of the “premium” option is within 15 percent of the “regular,” the participant will almost always choose the “premium.”
An insider view of your studio gives participants the chance to leapfrog their own progress in podcasting. It’s a valuable bonus. And if the “regular” price is reasonable in the prospect’s mind, the “premium” doesn’t seem like too much extra at all.

Why do clients choose the “premium” rather than the “regular?”

There are two distinct reasons:
  1. Clear benefits.
  2. The feeling of loss.
The first reason is the easiest to figure out. In the above podcasting example, you receive a clear benefit when you get to visit a top podcasters’s workspace.
The second reason is the feeling of loss — of missing out — an undesirable feeling that occurs when we want something and think it might be taken away.
Once we see the bonus and recognize its value, we want it immediately. The thought of not having it only makes us want it more.
We buy because we compare.
And when the client sees your “yes-yes” pricing, they start comparing the “regular’ with the “premium.”
There may be others selling similar products and services, but your bonus is special. Your bonus isn’t available anywhere else — and shouldn’t be.
That singular factor of the bonus makes your product or service different from whatever is out in competition-land.

The “yes-yes” system helps you consistently increase your prices

On our website, Psychotactics, we often start off with pretty random prices (we even have a book called Dartboard Pricing, so you get the idea).
But let’s say you’re not like us. Let’s say you’re a lot more sensible and you price your product or service at a similar price as your competitor.
Let’s say the “regular” price for your course is $500. And your “premium” is $550, which includes a great bonus that makes the client choose the “premium.”
At Psychotactics, fewer than two percent of our clients choose the “regular,” with the remaining 98 percent opting for the premium. This is for products or services as low as $27 and as high as $10,000.
In almost every instance, clients look at the bonus, and make their decision in favor of the ‘premium.’
Which means that if we start selling a product at $27 (“regular”), the “premium” would be $29.
Once we see that most of the clients are buying the “premium,” we do something really simple.
The “premium” becomes the “regular” (yes, it sounds confusing, but hang in there).
Now the “regular” is $29 and the “premium” is 10-15 percent higher at $33. Time ticks along and clients buy the “premium,” and so it’s time to raise prices again. The “premium” gets booted to “regular” at $33 and the new “premium” is at $37.
Using this simple method of “yes-yes,” we’ve sold lower-priced products ($10-$50), as well as courses that go upwards from $3000-$10,000.
Steadily and systematically, you can move the prices up — up and away — until you decide you’ve got the best price for you and your customers.

What about having three options?

If you’re like us, you’ll want to raise prices at regular intervals.
When you have just a single product or service, you may be tempted to present your customer with “gold, silver, and platinum” options.
But three options requires more decision-making.
If a client has to take too much time to think about her options, you might lose the sale.
The “yes-yes” system is a simple way to present two options, and it enables you to raise prices with the minimum amount of fuss.

It’s not easy to get clients pushing and shoving

You may instinctively want to give your clients a discount, not raise prices.
And yet, the “yes-yes” system is precise. It’s scientific. It works, and it’s super easy to implement.
Just make sure your bonus is mouthwatering!
For a detailed, visual “yes-yes” pricing grid and a free excerpt on “Dartboard Pricing” (with cool cartoons!), go to right away.
You’ll see how to construct the pricing grid (it’s easy), and then you can adapt the concept on your own slides, pricing sheets, or website.
And yes, increase your prices!
Let us know how you can incorporate the “yes-yes” system into your product pricing structure.
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