W-A-Y West of Jewfish Creek

Dear Friend & Subscriber,

My friend Joe Sugarman came down for the Super Bowl and I invited him and his pretty daughter, Jill, to take a little cruise with me on the trusty Original Sea Hunt.

So, there we were, tooling around in Port Everglades when we come upon a huge, bloated and tasteless vessel called the Trump Princess. What I do is, I steer over to just a few yards from this vulgar monstrosity and I yell out to a crew member, "Hey! Tell Donald that Gary Halbert and Joe Sugarman are here!"

The crew member said he would... right after Mr. Trump finished his nap.

The next day, I'm cruising with another old friend, Sam Kendes, who looks something like Walter Matthau with a world-class hangover. And, once again, I approach the Trump Princess and this time I yell out, "Hey! Tell Donald I can't make the mortgage payment this month and ask him if he's got enough money to make it by himself for the next 30 days!"

No response. This crew member didn't seem to have much of a sense of humor so I tootled on about my business.

Anyway, all this got me to reflect a bit on the Trump Princess and I go to idly speculating on what such a monster tub would cost. (I know, I know. If you have to ask, you can't afford it.) Which also led me to realize that one of the most important areas for me to cover in this newsletter is the matter of what is the most profitable price for you to charge for your goods and services.

Let me begin to focus in on this crucial subject by making an important observation which is...

Price Is Relative!

Listen: Fort Lauderdale offers (if you can afford it), the highest quality of living to be found anywhere in the U.S. and, probably, the world. It has 6-1/2 miles of uninteruppted beach, 170+ miles of inland waterways, (much more than Venice, Italy), a gorgeous subtropical climate and, for sickos who like that sort of thing, lots and lots of sweet sexy maidens running around in string bikinis.

It also has the Jungle Queen.

The Jungle Queen (actually, there are several of them now) is a large passenger touring boat that leaves almost every night of the year for a fascinating and informative trip up the New River which slices East/West through the heart of this wonderful city. During the trip, the tour guide points out the local attractions and he makes a special deal out of showing off those yachts and homes that will get an "ooh" and an "ahh" from his audience.

Well, he certainly did a good job and he got a lot of "oohs" and "ahhs" from me and Paulette... but not for the reasons he would have guessed. You see, when he would point out a particularly magnificent waterfront house and then say, "And guess what, folks, if you're in the market, this one just happens to be for sale and you can pick it up for only "X" dollars!" and the audience would marvel because it was so expensive and Paulette and I would marvel because, to us, it...

Seemed So Cheap!

Hold on! I'm not trying to say we've got monster bucks. No. What I'm saying is that we are from L.A. and, in the City of Angels, it costs more to buy an average home in an average neighborhood than it does to buy a waterfront mansion in this neck of the woods!

Price Is Relative!

A few days after our Jungle Queen trip, I'm taking a course in powerboat handling from the Bahia Mar Yachting School (I did great) and I get to talking to one of my fellow students named Ed who is from some dreadful state like New Jersey or somewhere. Ed is retired now but, previously, he traveled all over the world building power plants for General Electric. So, we get to shucking and jiving about the cost of living in various geographic locations and he tells me how outrageous it is in Tokyo, Japan. It seems that, over there, you have to have your car inspected every three years at a cost of $2,500. Also, he says, it'll set you back about $1,000,000 to join a country club. Fruit, he says, is not sold by the bunch, but rather by individually wrapped pieces and a single banana, for example, will run you about eight smackers!

You know, here in Lauderdale, whenever we are presented with a bill for something, Paulette and I have a tendency (unless the bill has something to do with a boat) to giggle. That's because, to us, the tab always seems so low.

Price Is Relative!

And, did you ever notice how Japanese tourists seem to giggle constantly... even in Los Angeles? Why? It's very simple. You see, to them, even L.A. prices are a joke.

Price Is Relative!

I believe all of us have psychological price points of resistance that are embedded in our psyches since childhood. I, for instance, know what a hamburger is supposed to cost. It's supposed to cost 25 and, if you want a slice of cheese on it, it is supposed to cost 35. And a Pepsi is supposed to cost 10.

And don't you try to tell me different!

You see, I know all this because I bought hundreds of hamburgers, cheese-burgers, and Pepsis from Bell's Diner on Wooster Road in Barberton, Ohio when I was in my teens and therefore... I know what this stuff is supposed to cost.

A relevant side trip: Years ago, I and my family lived for several weeks at The Plaza Hotel (one of my favorites along with the Pierre) in Manhattan. Never mind that the rooms were costing me hundreds. Never mind that the air fares cost me thousands. Never mind that cocktails in the Oak Bar would set you back a small fortune. No. All I could focus on was that those robbers were charging me $5.50* for a room service hamburger. (*FOOTNOTE: I had Paulette call the Plaza and check and the current price for a room service hamburger is $19.00!)

Can you deal with that? Whew!

I want you to imagine something. I want you to imagine you are on the ground floor of a tall, narrow building with one room per floor. You've got a ten foot pole in your hands and you are pushing the sharpened, pointy end of that pole against the ceiling...

Which Is Made Of Hard Rubber!

You push and push. You sweat and strain and finally you break through to the second floor. And then, you run upstairs and you pull your pole through the hole you've made and it is almost effortless to keep your pole going up and up until you come to the hard rubber ceiling of the second floor. And then, once again, you meet a lot of resistance. But, once again, when you do break through, it's easy going until you come to the ceiling of the third floor.

And so on.

And so it is with points of price resistance. What I'm trying to illuminate here is that, once you break through a certain level of price resistance, you may as well go all the way to the next resistance point. For example, a common price point in mail order ads is $19.95. Now, most of my experience tells me that, if you are going above $19.95, you may as well go all the way to $39.95. And, after $39.95, you may as well go all the way to $69.95.

A curious story: Years ago, I  was selling an El Cheapo impulse item and I tested $1.00, $2.00, and $3.00 and the $3.00 price won hands-down. But, when I tried to go above the $3.00 level -- even to just $3.10 -- my sales went right into the toilet!

So, how much should you charge for what you are selling? That's the real question, isn't it? Hang on. I'll cover that in just a bit. But first, here are a few ideas I have about price points:

t If you are going after "just slightly qualified" leads and you want to eliminate freeloaders, ask the folks to send you $1.00 or $2.00.

But, at this range, do not ask for a fractional mount like 97.

By the way, Blade Thomas (an excellent copywriter) and I once worked on an ad headlined "The Amazing Blackjack Secret of a Las Vegas Mystery Man" and we charged $2.00 for postage and handling for our written material and...

Those $2 Payments Covered The Entire Cost
Of A Full-Page Newspaper Ad!






$3.00 is probably the most viable price when you are trying to make a profit with a low cost impulse item.

If you are going above $3.00, I suggest you go all the way to $7.95 plus $1.00 postage and handling.

The next stop (if I were doing the testing) would be $9.95 plus $2.00 postage and handling.

Next: $14.95 plus $2.00 postage and handling.

Next: $19.95 plus $3.00 postage and handling.

Next: $39.95 plus $3.00 postage and handling. That's right. My experience leads me to believe that, after $19.95...

There Are No More Hard Rubber Ceilings
Until You Hit $39.95!

t     Next: $69.95 plus $3.00 postage and handling.

t     Next: $97.50 plus $5.00 postage and handling.

t     Next: $134.50 and no postage and handling.

t     Next: $195.00 and no postage and handling.

NOTE: These prices are not etched in stone. No. They are merely intelligent guidelines.

Now, here's another tidbit of interest: You notice I've emphasized that you should go from $19.95 straight to $39.95 with no stop in between, right? OK, but listen: That's only for when you are selling direct from the ad or letter. If your ad asks people to telephone and, at your end, you have people reading a short, low-pressure, "path-of-least-resistance" sales pitch, I suggest you ask for $24.50 which, for some strange reason, seems to be the price that proves out the most profitable in these situations.

Also, you can probably get away with having your phone person tack on another $3.50 for shipping, etc.

Another thought: If you are price testing on a new promotion, test at the lowest price at which you could reasonably hope to make a profit. Also, test this lowest price to a group of your very hottest prospects.

Why? Simply because most new projects fail and, if they are going to do so...

You Want To Fail As Fast As Possible!

Listen up: Time is the irretrievable element. What you don't want is to end up with bad numbers and be wondering, "Gee, maybe it would've worked if I only hadn't asked for so much money. Maybe I should re-test at a lower price."

No good. Look, Buckwheat, maybe this deal wouldn't fly even if you gave the item away and, if so...

You Want To Find Out
Your Very First Shot Out Of The Box!

Now, let's go to the other end of the scale. What if you're tying to sell something much more expensive like a seminar? Or a yacht? Or a Rolls Royce? Or your consulting services?

If so, my first piece of advice is...

Sell It For What It's Worth!

Don't ask for more. Even if some people will pay it. Why? Because it's not ethical, damn it, and you'll be cheating someone and that sucks.

Don't ask for less. If you do, you'll be cheating (and demeaning) yourself and that sucks also.

Come closer. Listen: I don't know for sure, but maybe I'm the most in-demand copywriter in the country. Believe it or not, I really do turn down 9 out of 10 prospective clients (read "Can You Afford to Hire the Amazing Prince of Print?" to understand why) and, because of this, I can, within reason, charge pretty much whatever I wish. However, in many cases, people are so eager to work with me that they are willing to pay far more than my standard fee.

But I Don't Take It!

And, why not? Simply because it isn't right. Look, whenever I go into a deal I do not go into it as a negotiator. No. I go into it as a detective. And what I'm trying to "detect" is what deal is fairest and most likely to work for everyone concerned.

I don't want more than my share.

I don't want less than my share.

You know, there are many people in the world of business who get their jollies out of besting someone else in a deal. They gloat when they find a printer down on his luck and they can squeeze him to sell them envelopes at less than cost. They hammer all their suppliers down to the last cent. If they're in direct mail, they want everybody's profit... even as far back as the guy who grows the tress that are used to make the paper the sales letters are printed on.

How sad. These guys are often wealthy and they think they are a success. But they're not. They're just lonely, lop-sided losers. Here's a composite picture of a typical American tragedy:

He's a multi-millionaire and he owns a chain of 73 retail widget outlets. He's 60 pounds overweight and his cholesterol level is sky high. He hasn't had a meaningful talk with his kids in five years and they're all taking drugs and think of him as a pathetic cartoon figure. He and his wife have separate bedrooms and his love life is nothing but a faded memory.

And so on.

And, can you guess what is the #1 priority of this miserable wretch? That's easy. What he's most concerned with is...

Opening His 74th Retail Widget Outlet!

What's that? You say you didn't subscribe to this letter so I could have a soapbox upon which to spew out my vapid moralizations? You say you want something really useful and immediately profitable on the subject of pricing?

Alright, what if I reveal unto you why the prices you are currently charging (no matter how many tests you've made) are probably way off the mark as far as maximum profitability is concerned? OK, boss? So, now hear this:

The Most Profitable Price
You Can Charge Varies Dramatically
Depending On How "Sold" Your Prospects Are!!!

Listen: About 70% of all adult Americans (including me) are porkers. Now, suppose someone offers one of us porkers a safe diet pill that we are 100% certain will let us continue to pig out to our heart's content and still lose weight like crazy? What would we pay for such a pill... if we were 100% sold that it would cure our weight problem forever?

Thousands. Thousands and thousands and thousands. Maybe even 100 or 200 thousand. And more!

Truly, it is so. But, since we are almost never "100% sold", we elect to take a "$19.95 chance" or a "$39.95 chance" or a "$69.95 chance" or whatever. Hey, let some lukewarm dork of a copywriter write a package for your investment newsletter and you may find that your best price (since you're only pulling in the hottest of the hot prospects) is very low... like maybe $19.95.

But then, if you're smart enough to pay the tab to get a real "killer" copywriter like Gary Bencivenga to do a direct mail package for you, you may find your most profitable price is much, much higher. Remember this:

A Lukewarm Sales Job
Forces You To Charge
Lukewarm Prices!

Often, a new client tells me that he "knows", from all his extensive split run tests, that his most profitable price is this or that.

Oh yeah? Well I never accept that at face value because I'm always thinking...

"You Don't Know Squat, Pilgrim --
Not Until Sir Gary Has Taken
A Shot At This Deal!"

Now, here's a very important insight I got from my friend Eric Weinstien who, for my money, is the best damn list broker in the country:

The Hottest (Most Responsive) Mailing Lists
Are Made Up Of Names Of People Who Have
Responded To The Weakest Of Offers!

Think about it. Only the hungriest fish will bite the crappiest bait.

OK, let's suppose you've got a strong sales presentation and you've tested all kinds of prices and you've come up with the one that works best for you. How do we improve on this? Trust me, you're going to love this insight -- which I'll begin to explain by reminding you that...

There Is No Law That Says
We Can't Charge A Different Price
To Different Groups Of People
Who Live In Different Geographic Locations
Or Who Have Different Income Levels
Or Perhaps A Different "Passion Level"
For What We Are Selling!!!

Hoo, haa Steverino! We're cooking now, ain't we?




Who says we have to charge the people in Mississippi the same as we charge the people in Manhattan?

Who says we can't do a different price test in every different state?

Who says the price we charge in the National Enquirer has to be the same as what we charge in the New York Times?

Who says we have to charge the same price to M.D.'s that we charge to ditch diggers?

Hey, maybe we should start "customizing" our presentations, our product, our product's name and packaging and even our price...

According To Whom We Are Pitching!



"The Price is Right"         


I've recently come across a book I consider "must" reading. It's called "The Clustering of America" and it's written by Michael J. Weiss and published by Harper & Row.

P.P.S. Don't you dare miss next month's letter. It's one of the most important I'll ever write.


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Copyright 2003 Gary C. Halbert.  All Rights Reserved.