“This amazing new gadget is usually $10,000, but if you call in the next five minutes, you can get it for $0.99.”
I’m sure you’ve heard something like that before.
It seems that everything online is always on sale and not only that…
But most things come with a huge discount!
I experienced this a few weeks ago when I came across a funnel and downloaded a lead magnet.
According to the seller, this lead magnet was usually $500, but for today only, if you gave your email, you could get it for the low low price of free.
Wow! What a deal!
And what was I getting for free?
A fifteen-minute mp3 containing positive affirmations.
…
Sure, I’m not here to tell you how much you can sell your product or service for, after all, people will pay crazy amounts for some things…
But I can guaran-freaking-tee that nobody has ever bought that 15-minute mp3 for $500.
And I bet if I looked, I bet I wouldn’t find that product ever being sold for $500.
That’s a problem.
Here’s why.
First, I have to say while I did take some law classes in college, I’m not a lawyer and this isn’t legal advice. If you are generally concerned about breaking the law, then you should contact your lawyer. Blah, blah, blah. I’m a copywriter, not your legal counsel.
What that out of the way…
As advertisers, marketers, and copywriters, we have to play by the rules of that big organization that’s always watching us, the Federal Trade Commission (the FTC).
In the past, some high profile online marketers have been slapped big time by the FTC, and they’re making their rounds with online income claims right now.
That’s why it’s important to have a copywriter like me that knows about this kind of stuff.
What does this have to do with that $500 mp3 I downloaded?
Here’s what the FTC has to say about pricing, emphasis mine:
233.1 Former price comparisons.
(a) One of the most commonly used forms of bargain advertising is to offer a reduction from the advertiser’s own former price for an article. If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison. Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious — for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction — the “bargain” being advertised is a false one; the purchaser is not receiving the unusual value he expects. In such a case, the “reduced” price is, in reality, probably just the seller’s regular price.
That part is essentially saying that you can’t make up an “original” or “reduced from” price just for the purposes of tricking customers. The FTC continues by adding (again emphasis mine):
© The following is an example of a price comparison based on a fictitious former price. John Doe is a retailer of Brand X fountain pens, which cost him $5 each. His usual markup is 50 percent over cost; that is, his regular retail price is $7.50. In order subsequently to offer an unusual “bargain”, Doe begins offering Brand X at $10 per pen. He realizes that he will be able to sell no, or very few, pens at this inflated price. But he doesn’t care, for he maintains that price for only a few days. Then he “cuts” the price to its usual level — $7.50 — and advertises: “Terrific Bargain: X Pens, Were $10, Now Only $7.50!” This is obviously a false claim. The advertised “bargain” is not genuine.
Now this section is interesting. It’s saying that you can’t increase your price to a high price just for the purpose of discounting later.
But we see this kind of stuff happening all the time…
As marketers we know that price anchoring works, but is there a way to do it ethically?
I’ll talk about that next time.
