The higher the price, the more they value it
Psychology experiments have shown that the more people pay for something, the more they value it.
People given a placebo pill were twice as likely to have their pain disappear when they were told that the pill was expensive.
People who paid more for tickets were more likely to attend the performance.
When people want the best, they look to the price to tell them what’s great. They think the expensive wine tastes better. They think the expensive headphones sound better. Even when secretly, those things are no different than the cheap ones.
If you sign a deal with a company, negotiate the biggest up-front advance possible. Even if you don’t need the money, it’s the best strategy, because the higher your advance, the harder the company will work to earn it back. It ends up being better for everyone.
Tony Robbins, back when he was first getting successful, started charging one million dollars for personal consultations. His reason was surprising. It wasn’t for the money. It was because his goal was to help people improve their life, and his biggest problem was people not doing the necessary work after coming to see him. So if someone spends a million dollars, they’re sure as hell going to do the work. He says it kept his success rate at 100%.
So it’s considerate to charge more for your work. People will appreciate it more, and get better results.
Yes, I have read stories where someone made a typo (typographical error) on an advertisement and ended up getting way more people at the higher price.
I suppose that is partly why in a "Support For (desperate) Alcoholics" office even a cheap ten cent brochure will cost... ten cents. (Another partial reason, I think, would be teaching self reliance: An alcoholic can go find two empty pop bottles for the brochure, if he wants it)
Feedback:
Consider deleting 'or headphones,' or putting it later in a sentence fragment: As with headphones. Or whatever.
Derek, very interesting idea. Starting my first business I gave away lots of free products and alienated people by this. I found out that people were happy to pay. They felt guilty to get something for free. Note to myself: people expect to pay if they receive something.
One precondition before you can charge high prices: you have to be convinced that your product is great. Or that people think that your product is great because you have great marketing. In a nutshell: your product or service needs to have value.
Tony Robbins is the best coach in the world. Value - Check!
Mouton Rothschild's marketing positions it a the "best" red wine. Value -
Check!
Charging high prices for a product that has no value is perceived as a scam. It's almost impossible to get out of the scam trap.
m.youtube.com/watch?v=GVVKUQmV5ZE
Reminds me of Gary Gulman comedy stand-up on Conan’s show, where he says he wants all THE music on his iPhone, and guess how much is he willing to pay for it...
love your articles Mr. Sivers. I used to be a working and touring musician but have since shifted into a new space similar to what Tony Robbins is doing. Your words and thoughts are always great food for thought and challenge my processes and mindset in the best way possible.
I notice you typically relate every post to the music biz, but i want to make sure you know that your words are adequately infiltrating many many other facets of this world, and I just want to thank you for it.
On the buyer's side, the trick is to hone the skill of appreciation. On the seller's side, love the idea of charging more to elicit the appreciation - it's a real win/win!
tell u $$$$$ talk to corporate board meetings..
ill tell my damion of creativity to pour 'gods soul' thru my art an music..
which isnt for sale..i leave that to the corporations
This can be a tough one when selling a service. Even when people are telling you how great your services are, if you don't fully believe it yourself, charging a higher price can be very stressful. Regardless, I think its important to focus on providing a premium service and charging a premium price and eventually get used to it. A less stressful way may be to do the inside work of valuing yourself highly first, then perform the premium service and pricing.
100% this.
Of course, the product has to be good in the first place, right?
Of course, but it would be silly to have to include that as a disclaimer every time we talk about anything. ☺ — Derek
In the book Busting Loose From The Money Game Robert Scheinfeld calls money a gesture of appreciation.
Totally true. I know people who determine whether something is good by looking at the price tag.
I believe the most valuable things are free. If you can create what you want with things already available, both you and the thing have intrinsic value.
Purchasing things is not only lazy, it's unimaginative. Which is far worse.
Starbucks figured this out a long time ago.
They turned the laws of supply & demand & capitalism on its ears by charging $4-5 for something that before then was about $1 or less. And people bought it, thinking they were getting something "special", and feeling as if they were part of some kind of "I drink superior coffee" exclusive elitist club.
There must be a better way. ;-)
Read uncomparable — Derek
Tony Robbins is a great person to look up to and seeing your quote about a million dollars made me wonder. I have never heard him say that but can see how it would work. I had some coaching sessions with a friend and we spoke about how when working for nothing brings great respect but can go against you when your time is valued. The best things in life are free, comes to mind.
Witness Peleton. Owners really talk these things up, a lot.
Hi there. Can you please provide references for your interesting claims? E.g., placebo pill cost relationship to efficacy.) I'm curious and having trouble validating. Thank you! Cheers, Danka