We’re still in the Information Age, right?
I ask, because every time I blink, things change again. Pisses me off. I was born into the transition of the Industiral Age into the Atomic Age, was a teenager during Sixties, hung out in Silcon Valley while the Computer Age hit puberty… and through no fault of my own somehow wound up teaching people how to make the best use of the Information Age.
Grizzled old veterans like me are needed, because of all the confusion surrounding capitalism in this brave new world of nano-tech information exchange.
Hell, a blink now is an eon in terms of data flow.
So, what is information worth?
That’s the question I hear most often, in various plaintive forms, from entrepreneurs. How do you put a price on an idea?
I have a pretty good gut instinct for pricing almost any kind of product… but it’s hard to explain how a gut feeling works. I’ve just been in tune with so many markets and so many buyers over the years, I can get vibes from the zeitgeist and translate them into dollar amounts.
My friend Dan Kennedy is one of the few to figure out a simple formula to help the “vibe challenged”.
Let’s say you have a book that explains a concept. Like, oh, how to sue your neighbor when he’s a jerk. Not when he’s committing felonies like cooking speed in his bathtub or running hookers out of the garage… you know, things that objectively lower your property value. That’s too easy.
No, this imaginary book of yours explains how to nail him to the legal wall when he’s simply a blot on your happiness. Doesn’t mow the lawn, is loud and rude, has a dog that befouls your morning paper, whatever.
(Is there a book like this anywhere? If there is, I want it.)
Anyway, how would you figure out what is a publication like that was worth? No real competition to emulate, no similar products out there to compare.
If you were in a bar, and the guy on the next stool overheard you talking about your book and wanted it… how much would you tell him he had to shell out to get one?
I know what most rookies would charge. Ten bucks. They’d figure they could get it printed at Kinko’s for four, mail it for two… and make four big damn dollars on each sale.
Oh, wait, that’s old school.
New world math: It’s ten bucks for the download. No printing cost, no postage. You keep the sawbuck.
That’s fair, right?
I am forever having to whack rookies upside the head over this.
No, it’s not necessarily fair. Did you try asking for one hundred bucks first? Or fifty? Or a thousand dollars?
When I get hired to help entrepreneurs launch an information product, we spend a LOT of time going over the price. There are many factors to consider — for example, if you are using this book as a lead generation “loss leader”, you may want to give it away.
However, if you find out there’s an overlooked crowd out there just itching to sue their neighbor for being a jerk… the info you have to share may be worth beaucoup bucks. (That’s French, I believe, for “oodles”.)
So, at the very least, once you establish that you can generate traffic that results in sales… you need to test price.
I recently had an Insider send me his ideas for testing price. He had a “good, better, best” menu he wanted to try out. I swear I am not making this up: $1,233… versus $1,333… versus $1,433.
That is NOT the way to do it.
Here’s one way to do it: Figure out a price that “seems” fair. Then, lowball that figure to the point where you feel you’re giving it away. Then, jack up the price until you’re almost embarrassed to be getting so much for what you offer.
An example: $19.99… $69.99… and $99.99. A good spread.
Until you test, you will never know whether the guy who eagerly bought what you have for $69… wouldn’t just as eagerly have parted with $99.99.
Or, that your product that’s breaking your bank at $69… wouldn’t put you on the Forbes 500 list at $19.
My clients, however, are most often astonished at how high they can go. One of them sold information for years at $49… until I shamed him into testing $69. Then $99. No change in response rates.
Same number of people bought. More money came in.
That means the “value” of the info, in the eyes of the market, was much higher than what the seller of the info ever dared to dream.
Gulp. They were leaving twenty bucks on the table, just by never testing $69.
And once they got over that shock, they discovered they were actually leaving FIFTY bucks on the table with each sale. For YEARS.
I could see the ulcers start to form as they grimaced, thinking of the fortunes left uncollected in their market.
Hey — at least they fixed it when they did. Without intervention, they’d still be happily giving the stuff away for half of it’s “worth”.
Back to Dan Kennedy: It’s not often another marketer shocks me… but Dan did.
He said: “Well, did you have them try $199? Or $499? Or nine hundred and ninety-nine dollars?”
Uh… no, I didn’t.
So I went back, and had them test $199. It didn’t pull well. But I didn’t give up — after all, the market had sort of been “trained” not to highly value this type of info before.
So I wrote better copy. I gave a REASON why it was worth so much more now. We pumped up the value with more reports, more tapes and discs and stuff. Turned it into a big old box of infomation, all aimed straight at the heart of the market.
And we discovered that — sold correctly — we could get as high as $399. It was a bigger, bulkier and more involved product… but still just information. At the end of the day, we were still just telling them things they didn’t know yet.
Dan reminded me to never let a client set the ceiling on prices.
No, no, no.
You let the market tell you what the most they’ll pay is.
For years, Dan has doubled… and then doubled again… his fees and prices.
And, at each amount, he (and his stuff) was worth it. Maybe he couldn’t have jumped directly from his earliest fees to what he’s charging now. Maybe you need to bring the market along slowly, in increments.
But maybe not. I was hanging around Jay Abraham’s office back when the MOST anyone had paid for a marketing seminar was $399. And you had your hotel room picked up, all your meals paid for… and the seminar lasted five days.
Jay was having none of that. His first seminar lasted just over one day… you had to pick up all your own expenses… and he charged five grand for the privilege of attending. You were guaranteed a chair in the room. That was it.
And you know what? Jay made you understand why this was still the biggest damn bargain in business. His copy gave you all the reason you would ever need to explain to your spouse and business partner why you were shelling out this fortune to attend a seminar.
Audacious minds like Jay and Dan are a national treasure. Especially for entrepreneurs and anyone else who is trying their hand at earning a living outside the “normal” corporate womb.
One of my very favorite Scuttlebutt tapes was the recorded conversation I had with Dan Kennedy a few years back. (Scuttlebutt Number 5: “The Secrets To Success That Scare Most People Half To Death.”) I don’t get to talk to Dan near as often I like. Lunch with Dan is a riotous affair… and I learn something new every time between laughs.
This guy understands the concept of “what the market will bear” better than anyone.
I’ll bet you’re already tuned into Dan’s world, in fact.
However, you may not know that he’s doing a brand spanking new teleseminar on making money as a copywriter next week. Lorrie Morgan-Ferrero — one of my Insiders and good copywriter on her own — has arranged for Dan to spill his guts on how to coerce clients to cough up the cash. (How’s that for alliteration?)
Copywriters have a helluva time figuring out what to charge for their services these days. Because skill at writing copy is really just another form of information — as the writer, you take an ephemeral sales pitch and create copy that persuades.
You take information… and make it manifest.
The top guys all get outrageous fees backloaded with royalty arrangements… but how do you GET to that stage?
You can actually watch copywriters slash each other’s wrists on www.elance.com — it’s great fun — by underbidding everyone else until the job gets awarded for spare change. (I would not be surprised to learn of copywriters offering to pay the client to do the work at some point.)
That’s just crazy.
Again, my own course on Freelance Copywriting covers this. (There are only three sections: Get good, get connected, and get paid.) You can check it out by hitting the link to the right up there.
But why not check out what Dan has to say, too? This is a guy I’ve respected and learned from for almost twenty years now (since we first met at one of Gary Halbert’s notorious Key West “Hot Seat” seminars) ($7,000 to put your butt in a seat). I was sort of co-producing the event, and Dan was the anonymous last speaker of the night.
It’s the only time I’ve actually felt my jaw drop.
This is a guy who knows what he’s talking about.
Anyway, you can check it out for free. He’s doing a no-cost “preview” of the teleseminar (which will cost you if you sign onboard) very soon now. You gotta hurry. Lorrie is gonna grill him about the specifics — the preview will be an experience not to be missed by anyone who’s serious about this subject.
It’s a free look, she’s told me, to show you what the teleseminar is really “worth”. Smart. And a gift to you — free info is getting kinda rare these days.
To see what the fuss is about, bop on over to http://www.kickstartcart.com/app/aftrack.asp?afid=294905&u=red-hot-copy.com/dk.htm
Find out what Dan has to say about the price of your skill.