An Extra $2,000,000 Profit on One Mailing
The Success Margin
Monday, October 31, 2005
Would you like a simple suggestion that made
one client an additional $2,000,000 profit on one
mailing? Imagine what you could do with it!
Today I'm going to discuss one of the most
important topics in any business.
The best way to price your product.
I'm often asked if I have any "secrets" to help
choose the ideal price of a product.
My answer is always the same.
I never know what the ideal price should be.
So, I never decide in advance on a final price.
Selecting a price should never be set by any
entrepreneur. In my opinion it should be set by
You should test different price levels before
settling on a final price.
** A dramatic real-world story **
A friend and client of several years is a highly
successful direct marketer of information
products. Let's call him RA to protect his
privacy. He's read my books, attended
several of my seminars and owns all my tape
He's heard me discuss pricing strategy numerous
times. But RA resisted price testing. He's a
stubborn guy. He just didn't like the idea. In
fact, until a few months ago he never in his
whole life ever tested a price. He simply set a
price and went ahead with marketing.
I had occasion to meet with him two weeks ago
and he told me the following story.
"Ted, while I've listened to you discuss it many
times, I had never, ever tested a price for any
product I've marketed.
But I figured, why not? Maybe I could improve
my bottom line, especially if a higher price
One of my main products is a home-study course
that is very successful and profitable at $1,397.
So, I tried a mailing at $1,997 with everything
exactly the same except price. I was amazed
when we generated around 33% more orders. Of
course, as all costs were the same (printing,
postage, mailing lists, lettershop) the profitability
Frankly, I thought it was some kind of fluke.
But, I repeated the mailing. The result was the
I now felt a lot more positive about testing
price, believe me.
In fact, I've been kicking myself for not having
done such an easy and simple thing before. I've
literally lost millions in extra profits.
Especially since you, Ted, have been beating me
over the head with how crucially important it is.
I then tested an even higher price of $2,997.
My whole world changed. I was astonished with
the result of the mailing. The result is over 50%
more orders than the original price!
I just finished doing a rollout mailing at $2,997
to my entire house list and best outside lists.
The net result is an additional bottom line
profit of over $2,000,000!
One thing is for sure. I'll never again market
any product without testing several prices.
Ted, I don't know how to thank you enough."
Has this actual case history yet convinced you
price testing is an absolute must for any
In my experience, I've found that sometimes
lower prices work best and produce the most
profit. And sometimes higher prices do, as in
the above example.
A lower price usually, but not always, results in
greater units sold. But not necessarily increased
profits. Much depends on how your prospect
perceives the value of your product or
As a brain surgeon, you would undoubtedly flop
selling brain surgery at a $99 weekend special.
But you'd probably succeed at a $25,000 price.
Which would you choose?
Or suppose you saw the greatest book ever
written advertised for $3. You would probably
not believe it.
I've had books flop at $20 and later sell 200,000
copies of the same book at $70. (That's
$14,000,000!) The title: The Complete Book
of Corporate Forms.
In any case, instead of arbitrarily putting a price
on your product, as do most entrepreneurs, I urge
you to let the marketplace determine your final
price. You can be sure you will be delighted
with the result.
© Copyright 2005 Ted Nicholas