Let’s continue the theme of behavioral economics in yesterday’s email.
One of the many (there are so, so many, seriously) bite-sized, yet so insightful and powerful, quotes from Rory Sutherland, an advertising legend, author of the book titled Alchemy: The Surprising Power of Ideas That Don't Make Sense, and current vice chairman of the Ogilvy & Mather group, one of the largest advertising agencies in the world.
One of which is: "To economists price is a number, to consumers price is a feeling"
Aka, price is always comparative. Nothing as any intrinsic monetary value. Something is only worth so much (or little) as someone else is willing to pay for it, which all depends many, many psychological factors such as framing, anchoring, emotional weight, positioning, relatability, impact, and many other factors marketers have to keep in mind at all times (or risk severely undermining the success of otherwise great products).
Sutherland likes to give the example of a Rolls-Royce.
More specifically, how Rolls-Royce stopped advertising at car shows and instead started showing their cars at boat shows. Seeing a $300,000 car next to a $70,000 car looks, and more importantly, feels, expensive. However, when looking at $20,000,000 yachts, suddenly a $300,000 car feels almost like an impulse buy.
Now, there’s lots to take away from this.
But if you could only take away one thing, then let it be to never be afraid to increase your prices. In fact, chances are you’re severly underpricing your products and services—most people actually are, me included. If anything, you could more than likely get away with simply doubling your prices right now (if not more).
As the old Dan Kennedy adage says, “There is no strategic benefit to being the second cheapest in the marketplace, but there is for being the most expensive.”
With that said, check out my flagship course Email Valhalla, I just might increase its price sometime soon: https://alexvandromme.com/valhalla/