Back when I first started out in marketing, I was fortunate enough to be friendly with an old marketing guru. He’d been around for a long time and had, quite literally, started with absolutely nothing and made millions marketing products, mostly through mail-order, in the days long before the internet existed. I had never met anyone like this guy before. He was a kind and gentle soul, but he was absolutely obsessed with just thinking up new ways of making money. And, that’s where the enjoyment of it all really was for him. It wasn’t in actually making the money, really — it was actually in coming up with the ideas. That was fun for him. He enjoyed it. He enjoyed brainstorming new and innovative ways of making money and then putting those ideas into action. The resulting earnings that he would see from those ideas were, to him, just as important, if not more so, merely as a way of gauging how well his ideas worked than it was as an income he could use to feed, clothe and shelter himself and his family and enjoy the pleasures in life that money can bring.
Because he loved coming up with and implementing money making ideas so much, and because he’d been doing it for so long — idea after idea, after idea — most of them successful to one degree or another, but some not — he had, of course, amassed a truly great amount of experience and learned a great number of valuable lessons. This guy — believe me — was a veritable well-spring of rock-sold, take-it-to-the-bank advice when it came to marketing and business. He was consistently spewing out facts and advice at every turn and, if you were smart, you listened, and you made note of what he said. You could spend hours upon hours with him, day after day, week after week, and on and on, hearing him constantly speaking these words of advice and wisdom and you’d never hear all he had to say. His store of knowledge regarding the subject was astounding.
Out of all of the pieces of advice I ever heard him give, two of them especially stuck out to me because they seemed so counter intuitive. But, like all of his advice, these too were rock-solid, take-it-to-the-bank pieces of advice. If you were to ask anyone, though, who wasn’t experienced in marketing, I’m sure they might say that the exact opposite of this man’s words were true when it came to these two specific facts. And, you might actually think the same thing. If you do happen to think that, however, I can assure you that you’d be incorrect.
The first piece of advice was this:
“Everybody thinks that if you can find something that everybody needs you’ll automatically get rich. That’s hogwash. It’s not easy getting rich by giving people something they need. What you have to do is find something everybody wants — not needs. People don’t like parting with money to acquire things they need. They’ll part with their hard earned money in a heartbeat, though, to get their hands on something they want!
Think about things people need. People need toothpaste, canned food, those sorts of things. Have you ever noticed how people buy those things? A can of soup sells for pennies, and people will clip coupons or wait for sales and jump from one brand to the next if one manufacturer is offering it for five dammed cents cheaper. Everybody needs soup and nobody will part with one penny more than they absolutely have to in order to get it. Making money selling soup is too much trouble. In order to make money providing people with what they need you need to do massive volume — that requires a massive supply structure — massive investment. It’s too much trouble. Leave it to the people that already have that kind of structure in place.
What do people want, but don’t necessarily need? Their dream sports car, right? Their dream boat. Their dream house. If they have the means, they’ll pay many, many thousands, even millions, for the exact one they want. And, they wont pass it up if they can’t get the best deal on it; as long as acquiring it is still within their means. You’d have to sell a million cans of soup to earn the profit you’d earn from selling one sports car or luxury yacht. Sell people what they want, not what they need. Lust has made many more millionaires than necessity ever will.”
The second piece of advice was this:
“If you’re not pulling the numbers you think you should be with your sales, try increasing your prices. You might be selling too low and scaring people off. Everybody thinks that if you want to make more sales you should lower your prices. Nonsense! People don’t trust prices that are too low. If the prices are too low it’s a signal that the offer is substandard. Now, that doesn’t mean that raising prices will automatically mean more sales — it’s about finding the sweet spot. You’ve got to sell at a price that is low enough that people still think they’re getting a fair deal, but not too low that people are suspicious they might be getting a lemon.
Many times throughout my years, when disappointed with the amount of sales a product was generating, I actually raised the price and saw an immediate and direct increase in the amount of sales. A lot of inexperienced sellers, disappointed with their sales figures, will lower their prices in an attempt to generate more sales. But, nothing happens. So, they figure their prices are still too high and they lower them again. Nothing happens. Again, they lower them. Now, they’re selling for almost their cost and people still aren’t buying. They’re going out of business and they can’t figure it out. Why are people not snatching up their product at such ridiculously low prices? It’s because people don’t trust their prices. Low price means low value. And, people want value. It doesn’t matter how low the prices are, really. I wouldn’t pay you a single penny for a lump of dung. I want value for my money. If they would have raised their prices to begin with, they likely would have created a perception of increased value and they would have increased their sales along with it!”