You wouldn't think charging more would be a good way to make your customers happy. And by itself, it's usually not. There are exceptions, like exclusive luxury items, where people brag about getting fleeced (though not in those words :-). But most of the time, people are happier with a lower price.

So how can you charge more for your product and make your customers happier at the same time?

The difference is how you frame your offer

Last week, Glenn Livingston wrote about a persimmon buying experience he had recently:

Persimmons are far and away my favorite food.

...

I practically fainted when we walked into the store and saw a display full of hundreds of them. HEAVEN, I thought!

I rushed to the display ... and started filling up a gigantic bag with about 14 of them...

Then... I paused.

Because the season just started, they were $1.49 EACH.

...

A Big Hairy Price Policeman in my head shouted "NO WAY GLENN... YOU CAN'T PAY $20 FOR A BAG OF FRUIT!!!"

To make a short story shorter, he ended up buying the persimmons, but only because another voice in his head spoke up and reframed the offer:

I remembered that I'd probably spent $40 on "Decaf Venti Soy Lattes with No Foam" at Starbucks that week.

And I said to myself "I'll be [darned] if I'm going to let Starbucks hijack my brain into believing I should spend twice the money on a quarter of the nutrition and a tenth of the pleasure of this big bag of organic fruit..."

How customers respond to your prices depends on what they're comparing them to. And since you can't count on voices in their heads to speak up and compare to high-priced alternatives, you need to set up the comparison yourself.

What to compare your prices to

If you offer good value for the money (which you should, or you'll run into problems even if you get the sale), you'd like the customer to compare your price to the value they'll get for it. And at some point in your sales copy, you should probably do that.

Reader Comment:
Antone Roundy said:
"Is it ethical to charge more than [is charged for] alternatives to your product?" "Framing" = establishing a frame of reference. I'm not talking about selling "crap" -- I believe I was pretty clear about the importance of delivering good valu...
(join the conversation below)

If it's easy to quickly communicate the value of your product (and I mean drop-dead easy and lightning quick), you may be able to get away with only that. But it's often easier and faster to set up a reference frame for your customers to look through by referring to things they're already familiar with.

For example, if your competition is selling a well-known DVDs-and-transcripts training course for $2,000, and your $197 product teaches the same things (though perhaps with less glitz and/or more honesty!), you might set pricing expectations by mentioning the $2,000 course first.

Of course, you'll need to explain why your product sells for so much less, and convince them that it's not because it only has a tenth the value.

You might position your competitor's product as an over-priced name-brand, designed to soak the rich and foolish (which, if your product really delivers the same value and isn't foolishly underpriced, it probably is!)

Or you might explain that your product supports all of your competitor's useful features, but without all the stuff that makes it more expensive, like useless features or features that are only useful for different kinds of customers.

To avoid the need to explain away a huge price difference, an easier route is to compare to something that's just a little more expensive. For example, a 20% or even 100% price difference is much easier to explain than a 1000% difference.

What if you don't have over-priced competitors?

If you don't have any direct competition, or if the competition is under-priced, you can use indirect substitutes to frame your price.

For example, if your product drives traffic to websites, but doesn't involve paid advertising, you might compare to the cost of driving the same amount of traffic using pay-per-click ads. Just be sure to choose an alternative that your customers are familiar with, and preferably already feel is overpriced.

Another thing to remember:

You don't necessarily have to compare products to get the benefit

I've used the word "compare" several times, but in fact, the important point is how you're framing your offer -- what the mindset of the customer is when considering your offer.

You could start off by mentioning how much you spent developing your product. For example, a customer who sees a $97 price tag after reading about the $15,000 and 6 months you spent developing the product is going to respond differently than they would have when they arrived at your site thinking about a $7 eBook.

What if there are free (or less expensive) alternatives?

Is it ethical to charge more than alternatives to your product? With all the open source software and free content out there, this is a question lots of people face.

Think of it this way: if the value your product delivers is in line with the price you're asking, why would it matter that someone else is underpricing or giving away a competing product? You could just as easily argue that their price is unethically low -- after all, it undermines the livelihoods of people like you who are charging a fair price, right? (How's that for a re-frame!) Personally, I think both are ethical.

You may lose some sales to the lower price, but there's nothing unethical about giving fair value for the price. And as long as you're delivering honest value, there's nothing wrong with framing your price against higher priced alternatives and ignoring the lower prices.

If you're uncomfortable pricing higher than your competitors, consider adding value that the competition doesn't offer, whether it's add-ons or bonuses or a better product, rather than cutting your prices.

Framing your offers properly helps customers recognize the value your products deliver. That leads to happier customers, even if you're charging more.

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