A Simple Psychological Trick That Increases Average Sale Price
Are you happy with your average sales price?
Do you feel that you’re employing every tactic available to close deals and sell at higher prices?
Or at an even more basic level, are you happy with your sales volume in general?
Most successful business owners I meet are somewhat adept at pricing, negotiating, and closing deals. Yet very few of them are aware of a simple, time tested sales technique called “Rejection-Then-Retreat” (also referred to as the “larger-then-smaller-request strategy”).
In Robert Cialdini’s classic book titled Influence, he describes in length how the “rejection-then-retreat” technique can be used to systematically present options to clients/customers in a way that will consistently result in higher sales.
To hammer home the effectiveness of this technique, Cialdini cites a powerful study from a report in Sales Management magazine, reprinted in the January 1975 Consumer Reports:
“If you were a billiard–table dealer, which would you advertise – the $329 model or the $3,000 model? The chances are you would promote the low-priced item and hope to trade the customer up when he comes to buy. But G. Warren Kelley, new business promotion manager at Brunswick, says you could be wrong….To prove his point, Kelley has actual sales figures from a representative store….During the first week, customers … were shown the low end of the line … and then encouraged to consider more expensive models – the traditional trading-up approach…. The average table sale that week was $550….However, during the second week, customers…were led instantly to a $3,000 table, regardless of what they wanted to see…and then allowed to shop the rest of the line, in declining order of price and quality. The result of selling down was an average sale of over $1,000.”
How Non-Retail Businesses Can Put This To Use
The implications here are exciting, and not just for retail businesses. These lessons apply to converting online sales at a higher rate, and at a higher price.
Notice how the New York Times offers it’s most expensive subscription option first and “retreats” from there.
Here’s what it boils down to: Average sale prices may be higher when you employ “selling down” strategies as opposed to “selling up.”
By starting with your highest price point products first, people are more likely to end up somewhere in the middle. Conversely, by starting your selling process at the low end, you are more likely to end up with average sales prices that are near the low end.
This is powerful stuff. Again, don’t think you can’t employ these strategies just because you aren’t a retail business.
Nearly every business has opportunities to exploit this powerful technique. Consider how you present your product or service offerings on your site. Do you offer your options at once, all lined up in a row? Could you adjust the way you present your options and pricing to first display your highest-price services or products?
Notice how 37 Signals shows you from left to right, the highest priced item first followed by a feature of the mid-range price:
Adjust Your Sales Copy to Work Prospects From High to Low
Even if you aren’t selling face-to-face, you can employ these strategies in the way your sales copy flows and leads the prospect through your products or services. Most prospects may not purchase your most expensive products or services. But by first offering them the highest price products, you condition them to be more comfortable with some of your more moderate pricing.
If you only have one offering for customers to select, this strategy is equally as powerful. Consider creating a couple more options with some extra bells and whistles. Even if you never sell them, the existence of higher price options will increase your conversion of more moderately priced products and services.
What you’re doing is conditioning the prospect to the existence of a higher price option, which then psychologically makes them more amenable to your mid-level and lower priced products and services.
Systematically organizing your offerings to achieve these effects is almost certain to increase average sales price, total sales, and profitability.