People like to feel superior. As a marketer, understanding this universal desire can help you do an awful lot of selling.
By appealing to your prospects’ pride, you can persuade them to pay more — sometimes much more — than what you could get by appealing to any other emotion.
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Let’s talk watches.
For $10, you can buy a handsome digital sports watch that will outperform and outlast virtually any luxury watch made. When these watches were first introduced (over 20 years ago), they were so good and cheap that everyone predicted the demise of the analog timepiece.
Well, it didn’t happen. The new technology revolutionized the watch industry and changed the market forever. But analog watches survived. In fact, according to one estimate, sales of $1,000-plus watches have more than doubled since the 1970s and continue to grow every year.
It’s Not Simply a Matter of Dollars and Cents
Why do people pay thousands for watches when a $29 one works just as well and looks great? (By the way, have you taken an objective look at some of the fancier Rolexes lately? Tack-eeee. Piagets? Like a muscleman in a tutu.) I like the look of the expensive watch I bought in Paris, but I’ve had to have it repaired twice in two years. And boy did they charge me for that!
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It’s not reliability. It’s not durability. It’s not precision. And it’s not beauty. So what does all that extra money buy?
In a word, prestige. Slap on an Ebel or a Cartier, and you have instant credibility with the fashion police. Thrust out a Rolex-clad wrist, and you announce to all those around you, “I have arrived.”
You need not say a word. What could be better than that?
The idea that price equates to quality is a myth. But price does relate to value. In the case of luxury goods, that value is prestige.
If You Understand This, You Can Outsell Your Competition
In Boca Raton, Florida, almost 30 years ago, a brilliant entrepreneur bought a large parcel of land west of the Interstate in what was considered to be a very undesirable location. It was unpopulated and miles from the beach. There wasn’t a store or supermarket in sight.
Instead of trying to compete with the frantic home building going on east of the freeway, this savvy marketer spent the money to build an 8-foot stucco wall around the property. In front of the wall, he planted trees, shrubs, and flowers. And he created a very elaborate entrance with pillars, pergolas, and arches. A guardhouse with a uniformed gatekeeper finished it off.
This was Boca Raton’s first “gated community” — and the first development to purposefully sell the promise of exclusivity. While other developers were emphasizing quality and value, our friend was selling prestige. (”Wait until your friends and relatives see this entrance and have to get permission from the guard to get in!”)
Lots the developer bought for $5,000 sold for $20,000, while lots on the “better” side of town were selling for less than half that amount. Today, those same lots cost a quarter of a million dollars apiece.
People will be happy to pay more for your product or service if it provides them with prestige. The more prestige you can offer them, the more they will be willing to pay.
You Can Pay Pretty Much as Much as You Want for Anything
When the Miami Heat basketball team opened its new arena years ago, it created a super-premium level of seating. It consisted of about eight seats that were practically under the basket. The price: a mere $50,000. Did they sell out? In about 24 hours.
In any marketplace — from watches to tractors — you will find luxury products selling for extraordinary prices.
Production cars range from $15,000 to more than a quarter of a million. Off-the-rack suits can be purchased for as little as $100 or as much as $5,000. The same holds true for just about everything.
If you make 20 grand a year, you are happy to get your macaroni for 89 cents a pound. If you are a millionaire, you search for handmade pasta at 10 times that price.
When I was first married, I bought used furniture, including a dilapidated couch for $25. When I started making a decent living, I came into the marketplace of $500 sofas. As the years went by and my lifestyle “improved,” I’ve had the pleasure of paying $5,000 and $10,000 for essentially the same thing.
I know $500 sofas still exist, but I can’t find them. They are not in the stores my wife drags me to. What I am confronted with, instead, have fancy names: divans, chesterfields, chaises, and settees. All priced at what I used to pay for my yearly rent.
Prestige Is Expensive
Whatever it is you are selling, there is a way to charge more for it — by throwing in a little prestige.
This may not be something you want to do right now. Now might be the time to grab market share by underpricing aggressively. But sooner or later, you should think about how to apply this very fundamental and powerful marketing strategy.
Remember that people with money want to pay you more — so long as it buys them a little prestige. And by charging them more, you are actually giving them a psychological boost.
Think about it.
P.S. Figuring out the right price to charge for your products is essential. It can make or break your business. In my book Ready, Fire, Aim, I give you dozens of pricing strategies. Some for start-ups… others for businesses that are floundering or stagnating… and even some for businesses that are doing okay but want to do much better. And that’s just one part of this complete guide for entrepreneurs. Check out Ready, Fire, Aim here.