Almost Alchemy: Make Any Business Of Any Size Produce More With Fewer And Less by Dan S. Kennedy

Author:Dan S. Kennedy [Kennedy, Dan S.]
Language: eng
Format: azw3, epub
Tags: General Fiction
Publisher: ForbesBooks
Published: 2019-11-11T16:00:00+00:00

CHAPTER 6

PRICE LIBERATION

“I think you should be able to lease a dog.”

- George Carlin

I believe I have had more impact on more business’ profit improvement by price strategies than by anything else. This is possible in large part because most business owners are Price Cowards!

Because there is an entire book in my NO B.S. series – NO B.S. PRICE STRATEGY, I’m going to abbreviate comments here a lot and urge getting and reading that book. Here I’ll focus just on Price Liberation. What does that mean? Most business owners’ thinking about price occurs inside a very small prison cell, made of norms and standards and formulas. A prison break can be done, to great effect.

What can just about any and every business do right now, today, to create some alchemy? Raise (some of) their prices. Simply or creatively. Consider two businesses at the poor end of price: fast food restaurants and dollar stores. Dollar store chains have enjoyed great growth over the past decade, but more importantly they’ve grown profits, profit margins and sustainability by featuring $1.00, $4.00 - $5.00, and $9.00 – 10.00 pricing. There’s even a chain called FIVE BELOW. The fast food chains introduced $1.00 Menus – but quickly figured out how to monkey with them, with $1.00, $3.00, $4.00 - $5.00 items, and bundles of $1.00 items adding up to $3.00, $4.00 and $5.00. I differ with their tactics only over the round numbers.

Price and customer reaction to price is always about 5’s and 10’s. This is THE Principle to strategically and tactically apply.

You And I Know Better, But We Are Still Affected

(Because What We KNOW Matters Least)

When we see a really pricey item, say a luxury car, priced at $89,995.00, one part of our brain chuckles at the silliness of it. Who are they kidding? our brains say. It’s ninety grand. Wowzer. But. Another part of our brain still reacts positively to the price coming in short of the 10, not quite the rounded up number with the zero at its end. We can’t help ourselves. People know that they’re being gamed with the $9.95 or $9.97 or $9.99, but they still feel a lot better about hearing it or seeing it than hearing or seeing $10.00. And I assure you with every fiber of my being and every ounce of my 47 years’ experience, how they feel is much, much more important than what they know or think – before, during and after a purchase.

All pricing should either stop between a 4 and a 5 or if it is going to click over the 5, it might as well go to between the 8 and the 9 or the 9 and the 10. There is no reason to stop anywhere in between.

Personally, I have usually adhered to my own advice on this.

For many years, my base fee for a consulting day has been $18,800.00 for regular clients and $19,400.00 for a new client. I count this as getting an extra $800.00 and an extra $400.

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