17 min read

No. B.S. Price Strategy by Dan Kennedy

No B.S. Price Strategy: The Ultimate No Holds Barred Kick Butt Take No Prisoner Guide to Profits, Power, and Prosperity

Alter your strategic approach to price, and view it within the context of marketing, not as a separate task tied to price-book and calculator.


Pricing is more art than science. Lots of mindset stuff on choosing to price based on value, not on costs, industry norms, etc. Forces you to focus on the customer and what she values. Low price is just ONE tool to acquire customers – the laziest. Show your customers the hidden price of free or cheap. The goal is to escape apples-to-apples and become a category of one.


Fortune favors the bold. Bold with reason, but bold.

Go to the ocean with teaspoon or bucket; the ocean doesn’t care.

When I say they fail at price strategy, I mean they fail to use price as a positive marketing tool and path to advantage. I also mean they fail to create the greatest possible profit in their business.

Sale prices are often nothing more that statements of what you should really be paying for something.

The thing to keep in mind is that offering discounts is a form of selling on price. When you offer a discount you are taking the focus from the value you provide and placing it squarely on your price.

Later, getting the same customer to stop thinking about price and re-focus on value can prove difficult.

Studies show discounts actually reduce the effectiveness of whatever is being discounted.

The guests paying substantially higher rates expected a better experience and molded their assessment to their expectation.

Discounts can also lead to dissatisfaction in your clientele. Discounts can lead your clients to ask themselves why your price can be discounted. They look at the price they have been paying, and then they look at the discount and smell a rat.

Like all powerful things, FREE has a dark side. The word FREE has destructive force, because it can create expectation of more free and more free after that, literally downgrading buyers to mooches, and creating barriers to you ever (or ever again) selling value and being properly paid for it.

The news media is a cautionary tale of which every business should take note. They confused the costs of their print editions with the value they provided.

FREE trains buyers to not only expect things to be free, but to demand it. To make matters worse, as the news media has learned, people do not value free. You have got to be very, very careful when using free.

I don’t care how fast this grows your list, I don’t care if you think you are triggering reciprocity, you are degrading the quality and viability of your buyers by giving away a premium offering for free. You are not, I repeat not, building trust or loyalty. You are building discontent and sowing the seeds of hatred.

If you have something addictive or habit forming you could give away samples. Drug dealers have long used this tactic. So have vendors on the food court at the mall. The main reason they hand you teriyaki chicken on a toothpick is because they hope you’ll love the taste so much you’ll buy it.

I like free newsletters, information packages, booklets, and even websites. I’m not talking about information that negates your customer’s need to use you. I’m talking about information that helps educate the customer. Information that helps the customer understands key issues and identify if they belong in your camp or someplace else. I call this edu-marketing.

I prefer an educated buyer. When you have an educated buyer they “get it.” They understand what they are supposed to do. They are far more apt to help you maximize your ability to help them.

Tell me, what do I need to know to do business with you? What do I need to know to feel confident about deciding to place my trust in you? How will I know I’m right for you and you are right for me?

Exx– “If we have to keep chasing you and sending you mailing after mailing after mailing, we’ll eventually get you (you know you want and need to come), but we will have spent a lot of time and money. Better to give that to you as savings in exchange for your earliest registration.”

The one thing I never, never, never do is discount fees purely because of the client’s desire to negotiate or some competitive pressure. Never, without good reason featuring some quid pro quo.

This is what intelligent businesspeople try to accomplish anytime they pay for expertise; buy money at a good discount.

Whatever field of enterprise you are in, seeking out buyers willing to pay for value rather than those seeking value far in excess of payment or, worse, feeling entitled to value far in excess of payment, or worst, willing to steal to avoid any payment, is critical. Being able to position yourself in a category of one for certain desirable customers, critical. Creating immunity to downward price pressure, critical.

The other problem was that getting people to pay for something that they thought they could get for free was an enormous challenge.

If you fail to help your prospective customers or clients see the “hidden price” of free or cheap, you will always be in a disadvantageous competitive position, because there will almost certainly be others willing to sell or work for far less, or even for free.

By taking free therapy you pay with wasted time, lost control, uncertain quality, and loss of privacy. Those are not small costs for many people.

It is a myth that any sale is better than no sale. I know you think you want the broadest market possible. As long as you have that mindset, it will hold you back. It makes your job too hard. You have to get through your head that you are not for everyone. It doesn’t matter how many prefer free and won’t pay, or even how big the majority want free and won’t pay. It only matters there are enough ho won’t want free – with its costs – and will pay, to support you as you want to be supported. The number of non-buyers and won’t-buyers doesn’t matter.

So you must determine who really wants what you offer and is willing to pay for it. Who within he population of potential buyers is the most likely to buy what you offer? Who shares your values/ those are your people. Alight with them. Give them the things they can’t get with the free option. Make no mistake those things do exist. You have to find them and let it be known that you provide them.

The million dollar secret here, summarized, is that every free has concealed costs, and when those costs are revealed to a market, there are many customers unwilling to incur the costs of free and profoundly prefer paying for the goods or services they want.

This sharply narrows the influence to those very much predisposed to bowling as recreation and ready to spend money doing it. But there’s third option: advertising Free. Done right, free can breaded appeal and draw in a much larger number of people and get them to try something they would not pay to try. That’s a bad thing if there’s no good system in place to roll hem over from Free to paying, repeat customers or if the Free is so expansive and openly advertised that it spoils everybody and damaged s the value of everything you do.

There is a three-part strategy you can use involving free to draw in a lot of good prospective customers, in a controlled way. You need

1) a compelling Free offer that people need to register to get, so you collect their contact information for all the follow-up you care to do;

2) a controlled environment, so the Free offer is directed at the right customers, and there’s good reason for it that does not extend to ruining your price positions;

3) a marketing system to convert the people attracted by the Free offer to paying customers immediately after their Free experience. (You can’t just let them lose, to wait for the next Free.)

Because there’s a logical reason for the Free limited to kids and to summer vacation months only, conversion of these families to paying customers works just fine. Most importantly, we capture every piece of data we need to do very targeted, efficient, and effective follow-up marketing; we successfully get actual addresses, e-mail addresses, phone numbers, and – of enormous subsequent value – birthdays of all the kids and adults in each household before a game is given away.

We are in the business of managing and mining this continually growing database in as many profitable ways as possible, for the participating centers, for our own company, and for sponsors not competitive with the bowling centers.

With this approach, any business can buy good, convertible leads with Free rather than with advertising dollars. Used this way, carefully, free becomes a form of capital used to buy an asset, not a “giveaway” that permanently cheapens the business.

While you must believe in what you sell, your opinion is not nearly as important as that of your buyers. They are the ones who decide what is worth their money or not.

The reality is that any commodity can be differentiated and sold for a premium price. All it takes is the willingness to do it and a pricing strategy to make it happen.

Amazon is the rising gain in the discount category. However, it is not safe from threats. Amazon may come to dominate the retail landscape, but they will not hold that position based on price forever. No one ever has. No one ever will. A competitive advantage of a low price cannot be maintained forever. It is an unsustainable advantage. Keep that in mind whenever you head in this direction.

The pyramid has gotten very, very broad and crowded toward the bottom. This has created great opportunity toward the top for those courageous and creative marketers who take notice.

The answer is a big glaring secret hidden in plain sight: some people are willing to knowingly pay more. The profitable question for you is: why?

In his case, he simply does not provide a single thing that can be found at Wal-Mart. Instead, he focuses on highly specialized products for serious hobbyists, for nostalgia-driven toy buyers emotionally connected to products where price doesn’t matter, and on service.

There is always a lower-cost, commoditized version of whatever it is you are buying. Why don’t you always buy the cheapest commodity?

All this plays to the power of radical individualism. It’s the newest consumer revolution. Rejection of mass merchandise and mass merchandisers, desire for something more special if not unique, personal, is what really matters. This gives you, the marketer, and the perfect opportunity to step forward and stand out, and call out to these revolutionist customers.

Triangle of Preeminence: expertise and excellence in patient/customer service; extraordinarily effective, high-visibility marketing; and generosity in community service and involvement. With this Triangle, any professional or business owner can stand out so dramatically from any crowd that he will attract patients/clients of the attitude and philosophy that price is the least of their concerns.

This is all part of the first side of the triangle: expertise and excellent service deliberately designed and presented so it cannot be compared.

Few buyers really want the cheapest price; all intelligent buyers want or can be made to prefer the best value. These things are rarely the same, but in the absence of persuasive information about matters other than price, shown two apparently identical items, we’ll all take the cheaper price of the two.

Here is a million dollar fact for you. If you will hammer it into your head, it will easily be worth a million dollars during your career, probably more. There is no B2B buyer of anything for whom some factors other than price aren’t relevant and important. Please stop, think, read it again. And again.

But no human is a cheapskate about everything. Few are cheapskates about anything when they are provided persuasive value differential information.

Your product-price price-product link is in your mind. It is not necessarily fixed in the same way in consumers’ minds. It probably isn’t. Yours is more rigid, theirs more elastic and flexible.

The product-price chain is best cut clean by…

1. Who is buying the product
2. Who is selling the product
3. The context in which the product is being sold

Different people buy the same product or service at different prices because of who they are, rather than what the product is.

Timing + who also matters. Parents spend considerably more money on their first baby and child than on #2 and #3.

A person diagnosed with a disease who has a “self-help” mindset will spend more on books, CDs, online information, multiple expert opinions, and alternative health products in the first six months immediately following diagnosis than in the ensuing six years.

You might think of this as contextual congruency – everything, i.e… Every little thing, fitting together to reinforce an idea supportive of a certain price.

Just factors that create the state of mind that makes a high price irrelevant: caring a lot more about getting X than its price. That is the state of mind you want your customers to be in when you are selling to them. This goal is everything. How you get to it may not, in your business, involve a holiday, amnesia, risk of divorce, a celebrity, or any specific item named here. The important thing is that you understand and dedicate yourself to the goal. It is the ultimate price strategy.

If you build your business by going after anybody and everybody, it’s almost impossible to avoid doing so based on price.

This is a very important principle: price elasticity has more to do with the customer than the product or the service. A lot more to do with finding the dozen buyers who cared a lot more about the quality than about price.

Promoting very strong, very appealing initial offers including generous discounts, gifts, or even free products or services is possible without destroying your price and ability to charge premium prices going forward only if the new customers given such offers are very carefully chosen.

You can’t separate price strategy from customer acquisition strategy. If you are bringing in customers of any and every type, interest, and motivation, this has to affect your price strategy, and will almost certainly drag you into dependence on the kind of price decisions, offers, and discounts that force your prices and profits down.

Place and buyer have an impact on both price and its impact on buying decision, so you want to present yourself in a good place to good buyers. Then, price’s importance is dwarfed by proposition.

5 propositions:
1. Unique selling proposition (sup)
2. Unique value proposition (up)
3. Irresistible offer
4. Unique safety proposition (sup)
5. Unique experience proposition (up)

Why should I, your prospect, choose to do business with you vs. any and every other option available? You need a continuing USP for your business and, often, additional USPs for different products, services, offers.

Why should I, your prospects, choose your regardless of price, be unconcerned about price, and never consider comparison shopping based on price?

UVP – this includes presentation of price and justification/minimization of price by various means, including, when bundling, the higher value of components if purchased separately; the value of the benefits to the user; money to be made or saved through ownership of the product or use of the service. The best value propositions find ways to make price a non-issue or to make the product pay for itself.

The task is to make a believable case for value far in excess of price.

You have to know your own customers’ psyche. A complete Irresistible Offer will often include discount, premiums/bonuses (plural), incentive for fast response, penalty for response after a deadline.

A lot of people are subconsciously if not consciously looking for safety, security, and certainty in an unsafe, insecure, and uncertain world.

Maybe the most important thing about this for anyone inexperienced with direct marketing is that you begin thinking in terms of making propositions.

Many might have balked at the bundle of three for $199.95 if delivered as one, but the delivery of the three gifts over three days, building up to the finale on the 14th was unique – thus a distraction from price and an added value. Ultimately, they took themselves out of clump of flowers to clump of flowers, apples to apples comparison territory altogether by changing one little element: delivery.

Don’t strive to sell your stuff as cheaply as you can; strive to sell it as effectively as you can, and price to support whatever is required to do that.

This must be your goal: escape apples to apples, searching for your One Little Thing is a very big thing.

The movement of a product or service from generic to niche or subculture automatically permits price increase, with no change in the actual manufacture or delivery cost of the product or service.

Its price is based not so much on what it is, and definitely not on what it costs to make, but on who it is for, the fat that it is for someone specific, and that they believe they and their needs are unique and automatically respond better to what is just for them vs. what is for anybody and everybody. Key word: automatically.

In the professional practice arena, my long time friend and student, Dr. Gregg Nielsen, advertises his Back-to-Work Treatment Program, his Auto Accident Injury Recovery Program, his Anti-Stress Treatment Program, and other specifically named treatment programs. All involve essentially the same chiropractic treatment. But if you’ve just been injured at work, which strikes you as more valuable: ordinary chiropractic treatment available anywhere or the Back-to-Work Treatment Program?

The deeper the commitment to niche or subculture, the less price matters for the precisely matched product, so the more price elasticity exists when moving a generic product to the niche or subculture.

PRICE IS NEVER AN ISSUE when acquiring a desirable horse, buying veterinary or chiropractic care, the best nutritional supplements or best equipment. That’s how everybody feels about something, and one of the finest price strategies of all is connecting what you sell with buyers who feel about it, or can be made to feel bout it, that same way.

The only difference lies in the buyers’ feelings about the product. Because it is presented as formulated specifically and exclusively for the buyer’s type of horse, he has more confidence in its efficacy and therefore in its value than he would in a generic product, so he is naturally agreeable to paying a higher price for it.

The most ethical thing I can do is present this beneficial product in the way most likely to be accepted by this customer. The least ethical thing I can do is let him wander off never trying my extremely beneficial product or buying inferior products because I’m a lazy, timid, or inept marketer.

As to the idea of over-charring without commensurate benefit to the buyer: nonsense as well. The benefit to the buyer is two-fold: first, getting him to buy the beneficial product in the first place, and, second, creating sufficient confidence and enthusiasm in the product that it doesn’t wind up idle on a shelf, but is used, used as instructed, and given a long enough trial to demonstrate its benefits. That is value. That is worth money. Even if there was a dollop of charlatanism in the selling, if there was a true benefit derived from the use that would never be experienced without the charlatanism, then the charlatanism itself has value and is worth money.

Often, the place strategy that can have the greatest upward influence on price is the move from generic or mainstream to niche or subculture.

It’s not just a thing, it’s a cocktail party story, an opportunity to show off; it’s about a person’s passion to which he is profoundly committed.

It also has those selling bragging rights and the cocktail party story, something affluent customers respond to. When your guests praise the steaks, you can say “Well, we have them flown in overnight from Allen Brothers. Have you heard of them? They provide the steaks to Morton’s.”

Instantly hers became “the limousine service of the stars” in that city. On my advice, she raised her prices to a point above all competition.

In almost every case, fame not only fosters interest and spurs demand, but also diffuses or negates price or fee resistance. Fame is a price strategy. You can get this benefit by making yourself famous or by association with other famous people, companies, organizations, or brand-names.

Most entities that go broke do so during a period of increases in sales volume. This statement shocks most people because everyone believes businesses fail as result of lack of sales. However, business is not a game of volume; business is always a game of margin.

Discarding the worst and keeping the best, less stress, and time to craft and deliver excellent products/service could yield as much or more net, take-home income.

Industry norm pricing ignores the cost and profitability of those companies being copied. It assumes they know what they are dong and that you can copy it blindly yet profitably. This is a dangerous assumption, since, give or take, only 5% of the business owners in any population prosper while 95% either struggle or fail. The number one cause of a business’s slide from success to failure to extinction over time is erosion of profit margin thanks to failed price strategy – not the advent of new competition, inability to get capital, or other reasons popularly believed in or offered as excuses.

If you are following industry norms it tells me that you have no clue about what your customers really value.

Just because other business owners have agreed to participate in a collective form of mental illness doesn’t mean you must too.

They do not care about your costs. Just because you have spent a boat-load of money n something does not mean they will have a drop of interest in buying it. What you spent developing it or spend delivering does not equate to value for the consumer. Your costs are totally meaningless to the market.

Cost plus forces you to focus on costs and not value. It limits you by its starting point. It pulls your attention away from the customer to the bucket of bolts bought and used to make the object being sold.

Our internal philosophy is that we’d rather provide the best therapy possible than provide the most therapy possible. Everything we do is aligned with that attitude. We’re in the results business. That is one of the key values we provide. Ironically we don’t promote that, our clients do. Our reputation is that of being expensive but worth it.

For most small businesses, profit must come before market share. If you prioritize growth over profit then you run a significant risk of never reaching profitability, and running out of gas before you get to the last lap, let alone the checkered flag and trophy. Market share is nice, profit is better, and often, the market-share leader never becomes the most profitable competitor in the field. Penetration pricing is neither for the faint of heart nor the thinly capitalized.

Price is seen every time a purchase made; membership fee seen only once a year or even two years if sold that way, or mostly unnoticed as an automatically recurring monthly charge to a credit card.

Instead of really selling value, they took the approach requiring little thought or skill and sold on price.

Business needs to be taught not demonized. Commerce is the root of society. Everyone is a part of it. It does not matter if you are the employee or the boss, professor or CEO, if you are being paid you are in business and you depend on a profit being made somewhere. Even the government can’t survive without someone making a profit.

“But MY business is different!” is the rallying cry of the poor. Creative adaptation is the behavior of the rich.

The only real way to be well-accepted and popular with peers is to be pitiable, to be poorer than they are.

Too much attention given to the judgments of the jurors with no legitimate clout is how people undermine their own ambition and achievement.

One of the great, universal truths about price: that the overwhelming majority of buyers of any product(s) or service(s) prefer making their choices based on criteria other than lower price, and will do so, and spend more than the cheapest available price, and/or more than originally intended when given a good reason/value proposition and sufficient emotional motivation to do so.

The question is not: how can I excuse myself from business modification so I keep my excuses for suffering? Not: how can I survive the recession? The question is: how can I be nimble, agile, and creative, modify my business, and alter my marketing to get a boost from recession? The best recession or rough time’s price strategy is creative and complex – not a red pen to mark down prices.

Your best price strategy will be in concert with smart marketing strategy, and it will not be accomplished simply with a bloody axe. Bring a full toolbox. One thing that must be in that toolbox is superior sales process, people, and salesmanship. Price is supported by skillful selling; undermined by the absence of salesmanship.

Exx– Right Decision Guarantee. Join without risk. Join our program now and enjoy the benefits for over a month without a risk. We call it our “Right Decision Guarantee” That means you can take up until the start of your child’s 5th week to decide if the Jumpstart Talking program is right for your child. If not, we’ll refund your entire investment without hassle. We couldn’t make you this offer if we weren’t totally confident that our program is right for your child. You have absolutely nothing to lose by calling XXX now.