Superstar copywriter Richard Armstrong’s novel, God Doesn’t Shoot Craps, should be required reading for any copywriter.
The book is not what today’s post is about at all. But I like to plug it whenever I can. One, because it’s a riotous romp through the seedy underbelly of the direct mail world, the mob, and more. And two, becuase I discovered in fawning all over Richard about his novel (which I’ve read a few times now — a rarity for me) that he’s a really nice guy… At least when you heap on the compliments!
Which brings us around to the beginning of today’s post.
Something Richard shared on Facebook yesterday sent my mind off on a tangent. We’ll start with Richard’s share, and by the time we’re done you’ll know the absolute fastest way to make a million dollars.
Here’s Richard’s story…
“My wife just sent me an article about a leading French restaurant in town which has been complaining about the necessity of having Dover Sole on the menu. At $48, they say, it’s still a loss leader for them. They can only afford to put it on the menu one night of the week and it usually sells out by 6:30. Now, I’ve had Dover Sole and I think it’s great. I think $48 is a reasonable price for something imported from overseas on the very same day it’s caught. But c’mon! Is it really the fish or is it the meunière sauce? It seems to me that there are dozens of fish that could fill the bill. Even tilapia would taste good, and tilapia sucks. But flounder, mahi-mahi, or halibut would do just fine, don’t you think? Call it “Filet of Flounder Dover Style,” sell it for $24, and make everyone happy.”
Here’s my first reaction to this story…
“Or charge $98!”
Richard accused me of thinking like a direct marketer! 🙂 I resemble that comment.
Now here’s the first thing I’m seeing in that story that shows how broken the restaurant’s thinking is. The $48 seems to me to be, in the restauranteur’s mind, an embarrassingly-high price. However, at $48, it is sold out by 6:30. This means that the price is easily at or below what the market will bear.
This is incredibly common. Listen, I know today’s economy stinks — still. I write doom and gloom financial promotions all day long. And yet, here’s something else you need to know. In ANY market, there is a demand for luxury and premium goods. And in 99.9% of cases, those luxury and premium goods are being under-priced compared to what the market will bear.
And this restaurant is certainly guilty.
My response to Richard may have seemed like a joke. I assure you, I may have said it off-the-cuff and lightheartedly, however I’m absolutely serious.
If it sells out by 6:30 at $48, try $58. Try $68 or $78. Try $98.
Yes, some customers will gripe. It may take until 7:00 or 8:00 to sell out (or it may sell out faster).
Demand is in your favor when you can’t keep a product in stock at a high price. Raise the price.
If you CHOOSE the lower price and make it an intentional loss-leader, that’s fine. Just don’t complain about it. You have options. And perhaps your best option is to find the dramatically higher price that customers are still willing to pay, that turns it from a losing proposition to a winning one.
Now let’s talk about even higher prices…
A client of mine in an industry where the customers are generally thought of as lower-income and lower-wealth sells a rather expensive product, considering that bias in the industry.
Without going into too many details, I’ll let you know he’d been selling this product for around $2,000, and making about $1,000 on each unit.
We had a chat, and decided it was time to try raising prices. He could always lower them back down, but it would be worth a test to see how many units could be moved at the dramatically higher price.
Not being too interested in subtlety, we just bumped it up to right at $3,000. Note this was a 50% increase in price, but based on the cost of goods, it was a 100% increase in margin.
Conversions dropped, but total revenue was a wash. Profits increased. As did work load for his team to fulfill orders. All around, a much more profitable proposition. And this immediately frees up capacity to do more aggressive marketing, bringing in more customers to increase revenue and profits.
More high prices being paid, even by folks you’d never expect…
Here’s a truth you need to recognize… People will find money to spend on things that are important to them. Even money you’d think they’d never have access to.
Drive through some lower-income neighborhoods.
I’ll bet you find satellite dishes galore on apartments, run-down houses, even trailer parks.
And inside, you’ll find a TV twice as big as the one you have in your home.
Same goes for cars. Many folks barely making more than poverty-level income drive nicer cars than Warren Buffett. Sure, he’s known for not splurging on his car — but you get the point.
Here’s another lesson in price — and just how much money flows around…
This was actually something I wrote to one of my “Unlimited Coaching” students recently…
“You underestimate the amount of money flowing around in most businesses. Just go to the mall, and watch the bags of merchandise coming out of these stores worth $50, $100, $250… REGULARLY — like every minute… That will probably end up in the back of folks’ closets, for the most part… Go to the grocery store at peak time, and watch all the aisles with $100, $150, $200 carts flowing through them at about 15 per hour… 15 open lines, 15 carts per hour, $150 average receipt, for just one hour of peak hour is $33,750 in revenue. In an hour. At a grocery store.”
There’s a ton of money out there. You just have to find what people want to spend it on, and give them what they want.
Which leads me to…
My own strategy on price…
I very quickly decided I didn’t want to be the lowest-priced provider of commoditized copywriting services. I couldn’t stand slogging away at a per-word rate that could barely keep food on the table if I wrote from dawn until dusk nonstop.
I decided I was going to find out what the most expensive copywriters and consultants knew and did, and copy that.
And so, from early on, I worked to make myself one of the most expensive providers in my niche.
I’m still raising prices regularly.
My goal is to make clients sweat a little bit when they agree to a project together.
And then in the results I get them — what they really want to buy — make them ecstatic they made the investment.
Higher prices have a lot of advantages.
Higher prices afford me more time and energy spent on a project to make sure I can maximize the chances of success. They weed out clients who are more likely to be a problem (not always, but usually). They give me free time to spend on things that reinvigorate me. They allow me to earn a bigger income, faster. If I’m selling a product or an experience or a service, they allow me to invest in additional elements that lead to the feeling that I overdelivered.
Like I said… Lots of advantages!
Yes, I still need to deliver. The client has to end up feeling like they got the best end of the deal. But that’s actually easier at a higher price than a lower one.
Which brings us around to the lesson you’re really looking for…
The fastest way to make a million dollars.
Let’s do some quick math…
If you have a $1 product, you have to sell a million of them to make $1 million…
If you have a $10 product, you have to sell 100,000…
If you have a $100 product, you’re down to 10,000 customers…
And at $1,000, you only have to sell 1,000 products to hit the $1 million mark.
You get where I’m going…
You only need to sell 100 items at $10,000 each to make $1 million…
10 at $100,000 each.
And if you can come up with a product or service worth paying $1 million for, you only need to find ONE customer.
I do this to illustrate a point…
It’s a whole lot faster and easier to make $1 million selling high-priced products than low-priced ones.
If you’re a copywriter, think about this when it comes to royalties, too.
Yes, it’s nice to be able to bring in thousands upon thousands of new customers for a low-priced front-end offer, designed to get new customers. But there are huge revenue opportunities in taking a swing at that $5,000 back-end service — if your client will go for it.
And often, those higher-priced sales to current customers are even easier to make than the new customer sale.
Yours for bigger breakthroughs,
Editor, Breakthrough Marketing Secrets