Pricing to Sell vs Selling Yourself Short

Dec 8th

A friend of mine suggested I read Dan Kennedy's The Ultimate Success Secret, a great motivational marketing book. One passage from it stuck with me:

When I first started in the "success education business," one of the few people in the country who was consistently effective at selling self-improvement audiocassette programs direct, face-to-face to executives and salespeople, gave me what turned out to be very, very good advice - he said: "Don't waste your time trying to sell these materials to the people who need it the most. They won't buy it. You should focus on selling to successful people who want to get even better."

Over the years, I've demonstrated the validity of this to myself a number of different ways. And I've developed an explanation for it. There is what I now call "the self-esteem Catch-22 loop" at work here: in order for a person to invest directly in himself, which is what buying self-improvement materials is, he has to place value on himself, i.e. have high self-esteem, but if he has such high self-esteem, he is probably already doing well and does not have a critical need for this type of information; he will get marginal improvement out of it; but the person who needs it most does not place much value on himself, i.e. has relatively low self-esteem, which prohibits him from buying, believing in or using self-improvement materials.

To some SEO forum members who spend 10 hours a day on free forums polluted with spam offers, EVERYTHING is overpriced (outside of a listing in THEIR directory). But is their opinion relevant?

Anyone selling "how to" advice, consulting services, or productivity tools is selling self help information. Price yourself too low and enter a market for lemons, enjoying fraud daily, selling to people who fear investing in themselves, while scaring away worthwhile prospects with a negative attitude and/or prices that eat away at your credibility.

Meanwhile, people who know less and sell a lower quality product may price themselves higher on the value chain and attract the right kinds of customers. Is it fair? Nothing is, and so you must increase your prices as your knowledge improves and your market grows. Anytime you can have half as many customers and still make the same income you are heading in the right direction.

If you are going to sell cheap then just give that idea / product / information away free and then look for a way to bolt on a higher value product or service. Price yourself at a fair value to get the right customers, build the profit margins to reinvest into building a higher value product or service, and help the people who are already successful become more successful.

Published: December 8, 2007

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Comments

December 9, 2007 - 4:22am

It's like Munger said, he hardly knows any successful person that isn't constantly reading / taking in new ideas or information...

Another quote to which I cannot attribute the accurate author: "The rich have their books and the poor have their television."

I hope this is a prelude to a new monetization model; get paid what you are worth with a nice reoccuring rev.

December 9, 2007 - 5:41am

This is the same issue when selling a box product, it's all about perceived value when it comes to pricing..

We did a study about 15 years ago in Miami with a video game I helped out on.. We put it in the stores at three prices.. The highest price actually sold the best, and since it was the highest price it made the most profit.. That price wasn't extravagant, or excessive, just a fair price toward the upper end of the price scale..

Selling your service is the same thing.. Dropping your price to get more clients never works, but amazingly raising it often does..

December 9, 2007 - 5:51am

So I take it we will finally see you up the price of seobook? :)
About time...

December 10, 2007 - 2:26am

It is amazing how true this is across all businesses not just information products. The person who needs your product the most the least likely person to buy it. The perceived value is directly related to the price tag not what's inside.

December 10, 2007 - 10:21am

i spent 7 years working as creative director for a studio i founded and during this time i learned that if you double or even triple your price the right customers wont have a problem with it... the difficulty is in retaining old customers who got a bargain... i did this through hammering down on my flexibility... which in turn doubled the business turnover, gave us more time to work on projects, making the clients happier... the moral of my story is get some balls!

jbspartners
December 12, 2007 - 1:30am

Great point and perfectly timed for me and my newest venture.

Another point to pricing is that the self-taught expert often does not realize how much he knows or is unable to imagine the tremendous value that can be provided to someone that does not have these skills.

So, maybe not exactly self esteem, but still the inability to value one's talents and image that others will too.

Plenty of people out there want and need technology services of some kind, but are technophobic and proud of it. These folks are waiting for you to meet their needs with a smile.

Thanks for the food for thought.

December 12, 2007 - 2:04am

Another point to pricing is that the self-taught expert often does not realize how much he knows or is unable to imagine the tremendous value that can be provided to someone that does not have these skills.

Preach on brother!

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