MEC Retailer's Research Log

October 12 Clinic Notes

NOTES:

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Pricing Micro-Test #1
	$7.95	$14.00	$24.95
Orders	390	480	300
Revenue Generated	$3100.50	$6720.00	$7485.00

Pricing Micro-Test #2
	$10.00	$12.50	$14.95
May 29	33	19	15
May 30	30	21	18
May 31	49	29	16
June 1	44	25	25
Total	156	94	74
Total Revenue	$1,560.00	$1,175.00	$1,106.30

Test #2 Return on Investment
	$10.00	$12.50	$14.95
Total Clicks	8,978	8,978	8,978
Average CPC	$0.09	$0.09	$0.09
Marketing Cost	$808.02	$808.02	$808.02
Revenue	$1,560.00	$1,175.00	$1,106.30
Profit	$751.98	$366.98	$298.28
ROI	93.06%	45.42%	36.91%

Test #2 Projected Revenue
	$10.00	$12.50	$14.95
1 Month	$35,100.00	$26,437.50	$24,891.75
4.5 Months	$157,950.00	$118,968.75	$112,012.86
6 Months	$210,600.00	$158,625.00	$149.350.50

1. If you are selling a physical product, you will need to know what your competitors are charging for the same or a similar product, and get a feel for whatever "added value" a prospect might perceive when buying from you instead of anyone else. Is your brand stronger? Is your reputation stronger? Do people trust you more? Is your service superior? Do you provide services or bonuses along with the product? Do you offer better deals on shipping costs or warranties? All these elements can influence the perceived value of your products.

   For retail products, one excellent way to see what your competitors are charging is to go to a price comparison site like http://www.PriceGrabber.com/

2. If you are selling a service or subscription, it is harder to make such a clear comparison with competitors. The perceived value of your service will depend on many factors. In the case of a service or "soft good," like an ebook, you should test a much wider range of price points.

3. Whether a product, a service or a subscription, one key goal is to find the price that is too high. In other words, keep raising the price until the results clearly show you are charging too much. Then slowly inch back from there...until you find the highest price the market will bear, giving you the highest revenue on sales.

   KEY POINT: If you haven't overcharged at least once, you may not be charging enough. Always take a price test past where you think the consumer's threshold is. The only way to zero in on your ideal price is by elevating it beyond the optimum and nudging it back down.

4. Conduct reliable A/B split testing on your pages, each with a different price, and test for long enough to be sure of the validity of your results.

5. Once you have found your optimum price point, try testing it again a few months later. Markets keep changing, and today's best price may not be the best price six months from now.

URLs:

1. Become an MEC Research Partner

2. http://www.mentaldisorders.com/

3. http://www.nationalalertregistry.com/

4. Subscription Revenue Brief

5. MEC Price-Testing Analysis Tool

6. http://www.PriceGrabber.com/

BIO:

Dr. Flint McGlaughlin

The Marketing Experiments Journal is published by Digital Trust Inc. (DTI). Dr. Flint McGlaughlin is the Director of DTI.

Dr. McGlaughlin is a pioneer in strategy and communications. His primary research is focused on discovering the most effective means to market intellectual assets across the Internet.

Dr. McGlaughlin has advised more than 1500 companies including, AT&T, The Federal Reserve, Pitney Bowes, and Merrill Lynch. He has conducted over 2000 hours of keynote speaking. He has directed the development of more than 20,000 web pages.

Dr. McGlaughlin currently serves as the Co-Executive Producer of the new FOX Family series: "Courage" - hosted by actor Danny Glover. He also serves as a senior advisor or board member to twelve growing companies, and four charitable foundations.

His writing and television production activities have, thus far, won two Tellys, an Edwin Murrough, and an Emmy.

Dr. McGlaughlin is quick to acknowledge that the research at MEC is largely dependent on the intense, focused efforts of the Lab's Leadership Team.