By Paul Lang, Editor, Sell It!
May 17th, 2000
| Product: | Make Your Price Sell! |
| Description: | Tool for calculating optimum selling price for a product or service |
| Available: | Now |
| Pricing: | “Buy Now – Pay Maybe” |
If you have ever had any formal marketing training you will undoubtedly have been exposed to what is known as the Marketing Mix and its associated “4Ps” — Product, Price, Promotion and Place. There is no room in this article to explore these concepts in any depth, but in summary the theory is that if we are to achieve our marketing objectives we must strive to get the balance of these “4Ps” right, and that no one “P” is any less important than another.
It is rather bizarre therefore that whilst the Web is packed full of marketing advice that addresses Product, Place and especially Promotion, there is very little mention made of the importance of Price. From my own experience I note that entrepreneurs seem to spend a lot of time and money developing a product or service and a Web site on which to sell it, but when it comes to setting a price they usually follow one of two simple strategies:
- They calculate a selling price by adding a desired profit margin (or mark up) to the cost of a product or
- They do a quick check of what price their competitors are selling similar products for and then set their own price accordingly.
Unfortunately, both of these strategies are seriously flawed: for every product there is an optimum selling price, that is a price that will deliver the maximum total profit, and neither of these two approaches is capable of establishing what this perfect price is.
Up until now, the only way to determine the best price for a product has been to either hire a pricing consultant or to perform some detailed statistical analysis yourself, but these approaches are usually well beyond the budget and skill level of a typical small business.
Savvy marketer Ken Evoy (the author of the ultimate Internet selling guide, Make Your Site Sell!) has recognized this problem, and his latest product offering, Make Your Price Sell! (MYPS!) has been designed to fill this gap.
MYPS! works by calculating what Ken refers to as the “Teeter Point”, that is a price that is equal to the maximum value that a customer puts on the benefits package offered by a product or service. Potential customers for a product are exposed to a simple, six question survey in which they are asked to state what price they consider is almost too high for the product, or what price is just too high. The important word in the last sentence is “or”, for the beauty of the MYPS! system is that people taking the survey are randomly exposed to only one of these two questions, which enables the “Teeter Point” to be determined with precision.
Using MYPS! is simplicity in itself. After “buying” the product (read on to find out why I have deliberately placed the word “buying” in quotation marks) all you need to do is complete a simple form on the MYPS! Web site and the HTML coding for a custom survey for your product is automatically generated. Just incorporate this HTML coding into a page on your Web site and you’re all ready to run — there is nothing else to be downloaded, nor do any CGI scripts need to be installed on your server.
Once you have gathered sufficient responses to your survey (Ken suggests 15 to 25 as a bare minimum, but preferably 100 or more) you can access full analysis of the results by logging on to your private Admin Center on the MYPS! Web site. Here you can filter your data (for example, by choosing to exclude extreme results) before plotting and viewing up to 8 bar charts and 5 line graphs.
The example below shows a plot of Unit Sales Vs. Price and Gross Profits Vs. Price. The graph indicates that the optimal price for this product would be around $60
MYPS! comes complete with a 122 page user manual in PDF format — not only does this show you how to use MYPS!, it also has some great information on pricing and pricing strategies in general.
I mentioned earlier that I would explain why I had placed the word “buying” in quotation marks. This is because Ken has adopted a unique pricing policy for MYPS! that he calls “Buy Now – Pay Maybe”. When you buy MYPS you pay nothing — you don’t even have to provide credit card details. Ken simply asks that MYPS! customers use the product, figure out what they think it is worth to them (if anything) and then pay him accordingly.
Verdict: Ken has done it again. MYPS! will not only help you calculate the perfect price for your product, but will teach you everything you need to know about pricing strategies — and then some more. And with its unique “Buy Now — Pay Maybe” price, you simply can’t lose.
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