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Prices As a Spur to Commitment

Marketing consultant Mark Silver tells of an acupuncturist client of his who discovered that when she charged more, her clients got better faster. Silver says, “One reason may have been that, in general, the clients more consistently followed through with what she told them to do between sessions, because, heck, ‘I’m paying enough for this, I probably should do what she tells me.’”

Likewise, you’ll see more and more people actually show up at a webinar they registered for, the higher the registration fee. Something free is just too tempting to blow off, regardless of the value expected from the event. Something expensive is harder to miss. Some education experts have even argued against making college tuition-free, because research shows that the fewer students pay for their education, the higher the dropout rates. So before you opine that sky-high prices are a rip-off, take this widely documented human tendency into consideration.

Peter Shallard comments, “When you charge more, your customers pay more attention. Trust me – I’m a therapist. I’ve often joked that a Quit Smoking therapist need only charge $7,500 a session to guarantee success. When a customer is forking over serious cash for advice, they’re going to listen carefully and act on it. This is known as “Client Compliance” – their fear of wasting money becomes your greatest asset.”

Shallard adds, “When I started my therapy practice, I was charging $50 an hour. I had to deal with the endless rescheduling of sessions (effectively wasting my time and increasing my overheads). When the clients did turn up, I struggled to get them to pay. I had to become a hardened debt collector, which made me miserable. These days, my minimum per hour face-to-face rates are $450. My clients never forget to turn up for sessions and I always get paid in advance.”

The street phrase for the underlying principle here is “having skin in the game.” Put another way, when people do not have a stake in the matter when it comes to a positive outcome, they may not stick with things and achieve the positive outcome. Pricing certainly plays into this phenomenon. Do the higher prices actually motivate people to ensure results, or are people willing to pay the higher prices only when they are ready to finally change and try hard enough? Perhaps a little of both.

Blogger Steve Pavlina talks about this in terms of generating benefits for both the payer and the payee. “If I price too cheaply, it means people can buy without having to trust as much, which can flood the business with too many jaded and skeptical people that I’d rather not deal with. If they want something too cheaply, they probably don’t want something really good, which means they won’t have the right attitude for supporting me in doing my best work. That isn’t going to create a win-win relationship.” In a win-win relationship, Pavlina gets compensated well and the client gets great results.

In the next lesson, we tackle whether everyone should get paid what they deserve.

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Written by

Marcia Yudkin