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Kindle Notes & Highlights
by
Josh Kaufman
Read between
January 9 - January 19, 2019
Value Comparison is typically the optimal way to price your offer, since the value of an offer to a specific group can be quite high, resulting in a much better price. Use the other methods as a baseline, but focus on discovering how much your offer is worth to the party you hope to sell it to, then set your price appropriately.
Most people who are new to business assume that the best way to increase sales is to reduce prices. That’s not necessarily true. Often, raising your prices is an effective way to attract more customers.
In introductory economics courses, this idea is called “price elasticity.” Offers with high price elasticity experience major changes in demand when prices go up or down. Offers with low price elasticity experience little fluctuation in demand when prices change. Economists love to draw downward-sloping pricing curves that show demand increasing as prices decrease.
Price elasticity
As you test different pricing strategies, you’ll notice certain thresholds where you stop appealing to certain types of customers and start appealing to customers with very different characteristics. This Price Transition Shock can completely change the experience of operating your business, and you shouldn’t take it lightly.
(1) understanding the situation, (2) defining the problem, (3) clarifying the short-term and long-term implications of that problem, and (4) quantifying the need-payoff, or the financial and emotional benefits the customer would experience after the resolution of their problem.
Upgrade your user, not your product. “Value” is less about the stuff and more about the stuff the stuff enables. Don’t build better cameras—build better photographers. —KATHY SIERRA, AUTHOR AND COCREATOR OF THE HEAD
Your Next Best Alternative is what you’ll do in the event you can’t find Common Ground with the party you’re negotiating with.
Exclusive offers make it much easier to maintain high Perceived Value, since there’s no direct competition.
If you’re the exclusive source for what your prospects want, you win.
In every negotiation, there are Three Universal Currencies: resources, time, and flexibility.
