Your product or services price has nothing to do with its actual value. It has everything to do with its perceived value and how well you can build that perception in the mind of a prospect using effective marketing.

Testing Price Points

All the price theory in the world wont tell you what your optimum price is until you let consumers test it with their wallets. I remember Mark Nolan, author of The Instant Marketing Plan once telling a story about how he sold 100,000 copies of a book on free publicity hed written for $29 a piece.

After selling a ton of these books he had a conversation with another marketer who asked him if he had tested his price at $49. Mark just stared at him as he realized that hed been so busy selling his book - and things were going so well - that he hadnt tested his price.

You should consider starting your test with four price points:

1. What you think should be the price.

2. The highest possible price you can imagine, but one to which you think that consumers would still respond.

3. A low price that is a great deal for the customer, but less than you want to charge.

4. A fourth price that is outrageously high or low.

Holding everything else constant, determine the sales from each price point. Youll probably find that the price that obtains the maximum sales and profitability is higher than what you had originally intended.

You might also consider price-testing a combination offer. By this I mean: what combination of items can you offer for the maximum sales at the highest price? This may be more difficult in the real world but on the Internet it is simple.

Just send one stream of prospects to a page with one combination and price and send a second set of prospects to a second page with a different combination and price. The combination could include different products bundles, different guarantees, different service features etc.

Teeter Price and the Six Questions

Ken Evoy, coauthor of Make Your Price Sell, an online price determination product, invented the term "Teeter Point," which he has even trademarked. The teeter point is the price at which a consumer just cant make up their mind. Its the point at which if the price was raised a dollar youd lose the sale and if it was dropped youd win.

The trick of course if find the teeter point. Ken asks two questions to two different groups of people to find the teeter point.