Have you ever received an email from a marketer saying “Sorry…I screwed up..I sent an email yesterday saying is $297 where as it is just $97. I stupidly typed an extra ‘2’ in the original price. Right now I’m busy sending out a gazillion $200 refunds. So – sorry about that. But the correct price for the is $97 – not $297.”
What’s happening here?
This is a secret “anchoring technique” that slips into your mind so silently that your mind is bound to take an action…
Here the marketer is giving your mind a starting point to think that his product is really worth the $297 price tag, by showing you a social proof that many of his other customers have already bought the product at a higher price ($297). But he is still refunding many extra $200s so it is a “huge steal” for you to get his product at a bargain price now.
Your brain instantly got attracted to this product now and it wants to buy the product before it is too late.
Let me give you another example to prove this:
Let’s say you and I go to a party where there are lots of people in a room. If I ask you “What do you think, how many people are there in this room?“, your mind will start thinking and you will make a guess. But if I ask you a different question “Do you think there are 100 people in this room?”
Now your mind got a starting point to think and you will automatically make a guess around that number.
So how you can use this pricing? Well, if you say something is worth $297 you anchor your customers’ minds to that price point. And when you send our a follow-up email saying, “It’s really only $97 and I’m making lots of $200 refunds” that tells people that they are getting a steal because the price is not only much lower than their anchor point but it’s also got the social proof aspect, that if the marketer is issuing a lot of $200 refunds then he must have sold a lot at $297 which means a lot of other people thought it was worth $297 too.
Let me share my own example – I built a membership software and I posted up the demo and informed about 500 people of my mailing list to try it out. Inside the demo, I posted just ONE question “How much you are willing to pay for this software?” and the options were $99, $129, $199, $299, $499.
So what did I do here? Yes, you are right..I gave them a starting point of $99. So now, no matter what, they knew that the price is not going to be less than $99.
But wait…I did something else too…
When I beta launched the software, I set the price as $0 (free). And then I posted one little add-on to it for 40 bucks.
Guess what – From those 500 people, 141 people ended up buying that forty bucks add-on and downloading the free software (for which they answered $99 as the best price). That’s 28.2% conversion (believe me, it’s a high number)
Because by now, in their minds, the value of the base software was $99 or more and they got it for free, plus they got an amazing add-on for just $40…which is half the price of what they have guessed for the main software.
See…how POWERFUL it is? Give it a thought and I am sure you will come up with something similar for your own business.
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Image Credit: Martoulette