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 the marketplace.

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 sets.

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 worked.

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 just soared.

Frankly, I thought it was some kind of fluke.

But, I repeated the mailing. The result was the same.

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 successful marketer?

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 service.

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.

Your correspondent,

Ted Nicholas