How would you like to find out how one company was able to change one thing and then boost sales by 533%, then make another tweak and and then boost sales by 5,499%? I will show you exactly how they did it here.

Ever since I got started in sales decades ago in the 3rd grade selling Christmas cards and combs door to door, I have always wondered about pricing.  Yup, I started early.  I wanted to buy a camera and a chemistry set.

As I moved on to selling different things, I discovered quite a bit more about pricing,  much of it by accident.  And one lesson that is quite funny actually, but very insightful that I promise to share later.

As I got older, I made it a point to study pricing in books and in practice.  While pricing is important, it is not the only thing that determines profitability or if the sale is made.   But, for the vast majority of items, it can be the overarching determining factor of the purchasing decision.  The best three ways to find out are test, test, and  test.

Over the years I seem to have heard quite a bit of pricing lore that were always seemingly contradictory, yet in their own way, each made sense if you looked at them in a vacuum.  What this means is like any information, it can be dangerous in the if not used properly or in the hands of the ignorant or stupid.

First one that I happen to like the most is, never sell from your heals, in that you don’t want to be timid when selling and the fist thing you go to is to start negotiating with customers on price rather than letting them know how your product or service benefits them.  Much, much more on this in another post and video.

Second one is that the lower price will almost always win.  Pretty much true at least 85% of the time for most products.

Third is that you get what you pay for so, you should always be the highest priced product or service. When you are you have to deal with less customers and have less overhead, so you make more money.

Well, as a story I saw the other day in Tech Dirt reminded me, with the Internet, there are a couple of new ones along those same lines.  One of the reasons why I like the Internet so much is that it can give you instant feed back and it allows you to test everything and shorten the feed back loop so that failure happens more quickly.  This allows you to figure out what works and what doesn’t.  Contrary to what you may have thought, failure is not only a good thing, but you need to embrace it when it comes to your sales and marketing.

But like getting a kiss from your favorite aunt when you were a kid, you just want a quick peck on the cheek and get it over with as soon as possible, but still be glad to see her.  Do not get into a big old slobbery  smooch.  Kind of grosses you out doesn’t it?  Good!  I want it to.  You should have the same aversion to hanging out with failure in your sales and marketing as getting that big slobbery smooch from Aunt Ethel.  Although after looking at some companies marketing and sales programs it does make you wonder.

So, lets start with some common sense things concerning sales that I think we can all agree on that even a 5th grader could tell you.  When Walmart or any big retailer wants to attract more customers, they lower prices and then more than make up for a lower margin with higher volume.  This works time and time again and only  a few idiots would bother arguing this fact.

In study after study this works not only in retail, but in Airlines and virtually everything else.

Andrew Carnegie did this with Steel when by purchasing up a majority of the steel manufacturers in the United States and having a virtual monopoly, he vastly improved efficiency and was able to drop the price of steel 10 fold and usage went up over 10,000%.  This made steel affordable for every day use.  I dare say he helped bring in the industrial revolution.

Rockefeller did the same thing with Kerosene by putting together Standard Oil and buying up a majority of refineries and dropping the price of kerosene 10 fold thereby making it affordable for everyone.    Both of these men single handedly probably did more to improve the lives of millions of people than all of the charities or government progroms combined.

Yet both were wrongly labeled as robber Barrons by a very success public relations campaign of progressives and communists of the time and still to this day, who basically could care less about how much they helped the public and more about how much money and power they could give to themselves.  If you want to read a good book on Capitalism, “The Politically Incorrect Guide to Capitalism” is a great place to start. But I digress.

A lower price has also been proven to work without fail concerning total revenues brought in for government taxation.  Here is a fact you may not know.  In every single instance where taxes have been lowered, the end result is more total revenue for that taxing agency.  It does not matter if it is Federal, State, Or Local.  Lower taxes always bring in more total revenue.  The only reason politicians ignore fact this is either they are stupid and choose to ignore the facts and they want power over you, period.

But back to me and you and pricing.  We have established that lower prices mean more sales and more gross revenues.  How far can this go?

Well recently and online gaming company in Sweden dropped their prices 50% and saw sales go up 533%.

But guess what? Two weeks later when they put the prices back up to the regular price sales were 20% higher than before the sale.  Sales do work!

Then the next experiment was to reduce the price 75% and sales went up a whopping 5,499%

Now if you have any type of back end sales and you of course then put these people on your list and remarket to them, the compounding of this can put your sales to
the moon and beyond.

The bottom line is that if you have a digital product, lowering your price can have a huge impact on your bottom line. 🙂

Imagine your sales going up 533% or even 5,499%.

Have a profitable day.


Andrew Anderson

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