I’m going to continue our talk about product pricing strategy today, but in a slightly different way.
Today’s Tip Sheet is all about product
launches.
Primarily this is geared for business
owners with an on-line product or service
that they are launching, but you can
use this advice for just about anything.
What I am about to tell you flies in the
face of almost all traditional launch
coaching, but I think that it’s important
to maintaining a healthy business for
the long term.
…it’s a lesson from the U.S. Guv’mint.
First, let’s take a ride in the Way Back
Machine and look at the traditional advice
for launching a product.
The idea is that you should create a list
of prospects, slowly build up hype over time,
and then for a very limited time, you offer
a huge discount to that group of people that
got on the list and raised their hands to show
interest.
Now, this works in the short run, don’t get
me wrong here.
The problem is that once the intro offer is
over and your price goes back up to full
price, all of those people that were on
the intro list and didn’t buy, will probably
never buy.
This is because they now see the price
increasing from the low level of before.
You have now lost that customer and a lot
more to go along with it.
You get a quick boost of cash in the short
run, and then everyone will forget about your
product due to the increase in price.
Take the U.S. Government as an example. There
have been many techniques to try and stimulate
the current economy, one being a huge rebate
of $8,000 for first time home buyers.
Now, this rebate created a huge influx of
people buying homes, but once that rebate program
was over, home sales dropped like a cinder block
being thrown off a freeway bridge.
So where in the heck am I going with this?
When you launch a new product or service, you
should still generate all the buzz in the world.
Your product won’t sell without you going out
there and banging two trashcan lids together,
making a ton of noise and generating interest.
But… be REALLY careful when it comes to your
pricing.
If you want to generate a substantial, long-term
business with your product, skip the deep discounts.
Offer one-time bonuses to early buyers, or some
other incentive that can be packaged with the
product or service, but don’t cut the price
and then raise it.
Otherwise you are going to develop a business
that can only survive on a consistent string
of product launching and that can be exhausting
for you, the owner, and for your customers.
If you really want to kick a lot of arse and
change the way you think about pricing strategy
for your own business, check out:
http://www.product-pricing-strategy.com
Until Tomorrow,
Joshua Black
http://www.product-pricing-strategy.com
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{ 4 comments }
Josh:
You bring up some excellent points here about product launches. It seems that most “guru’s” definitely follow the very limited time, hypey model. This works for them because of the brand they have already built. They launch a new product once a year and chanrge thousands of dollars and are good to go until the next year.
Then there are some re-launches or opening the doors again for a limited time offers that go on.
You point is well taken about creating the noise to launch your product and even offering a deep discount to those that act on the offer first and then having a normal price on the product to continue to sell and have a sustainable product. I think this is the model that the average marketer should be following.
Take care,
- Rick
Rick,
Yes you are right about the guru model and in fact, many peopl do just that. They luanch an expensive seminar or coaching program once or twice a year and the income from the launch is their annual income. What I teach is different, more sustainable. I am saying that you should NOT discount your product during a launch, but instead ad bonus items for people that get on the bus early. This way, people that buy in later will not feel like they are getting ripped off.
-Joshua Black
Hi Joshua – This is great advice. I’ve noticed a lot of gurus do that when they launch too and after they’ve doubled the price, folk seem to stop talking about the product.
I am working on a product and I wondered if it would be wise to use the same approach but reading your post has made me realise it would not.
As you say, if you put all that effort into creating something, you want it to keep selling well into the future.
Hi Cath,
Thanks for stopping by. Yes, I would suggest adding extra bonuses and other items for people the buy early on launch day instead of reducing the price of the product just for the launch. For some reason this is the status quo way of doing things right now, and I think it’s a horrible way to run a long-term business model. As I have learned the hard way from my own pricing, people tend to completely walk away from a product after you raise the price.
When you have a buying audience, sometimes it takes up to 15 interactions with your sales material before a person could make a buying decision and this could be long after the launch. If you have doubled or tripled the price by then, they will leave. I am on many many lists, and some of the marketers that I really admire do this, and I have completely given up on buying their product… and these guys are selling stuff that started as $250 and then went to $750 after the luanch… crazy..
-Joshua Black
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