Let’s say the average candy bar sells for $1 US.
How would you go about selling candy bars for $5?
You could create an amazing candy bar that stands head and shoulders above all others.
You could develop a devilishly clever marketing campaign that persuades the world there is something so amazing about your candy bars that they’re worth the five times the normal price.
You could turn each candy bar into a lottery ticket (ala “Charlie and the Chocolate Factory”) with the winner getting a prize so fabulous that it makes the $5 look cheap by comparison.
Or you could just sell “good enough” off-the-shelf candy bars for five bucks.
Before I suggest a way to do this, let me explain how important it is that you give thought to a challenge like this.
If you’re a major league candy maker like Hershey or Nestle, you can make a lot of money selling candy bars at low prices. Super high volume and saturation distribution make it possible.
But what if you’re a small operator with limited resources?
You’re not going to be able to play the game of having your products in every store in every city and state in the country and around the world.
Your reach is going to be very limited in comparison. Your infrastructure is going to be modest. Your customer list and your total number of transactions is going to be small.
Under circumstances like this you need super high margins.
Not because you’re greedy or because you want to squeeze the last nickel out of every transaction, but because with a limited market you need high margins. If you take the time to do some simple arithmetic you’ll soon see there’s no other way your business is going to survive.
Now let’s get back to the question of how to sell $1 candy bars for $5.
I came up with the idea for this article while resting my sprained knee in a hotel room.
As I read, watch TV, and get in and out of bed, a basketful of mini-bar goodies stares me right in the face, hour after hour, day in and day out – and I’ve been here ten days.
Now, personally I’m not going to buy the $5 candy bar. Two reasons for that: 1) I’m too cheap and 2) I’ve decided that being something that approximates thin is more pleasurable than eating candy bars.
But I’m not everybody.
Some people – not all, but some – will spend the $5.
Some because when they’re on vacation or on an expense account they spend freely. “$5 for a candy bar? Sure. It’s here. I want it. I’m on vacation. Yipee!”
Others find themselves in a situation where they’re really hungry and really want a candy bar and are too lazy and/or tired to leave the room to find a reasonably priced one.
Still others are just impulsive, have weak sale resistance, and/or just get worn down seeing that candy bar every time they look up.
In circumstances like this it’s: “$5 for a candy bar? Sold!”
Note that no one had to create a super deluxe candy bar to get this price. Nor did they have to write reams of ad copy persuading would be candy buyers that this was the candy bar they simply had to have.
Now I’m not suggesting that building a hotel in order to sell $1 candy bars for $5 is a viable business plan.
But what I do want to do is put a spotlight on the power of context in selling.
Let’s look at the dynamics of the $5 candy bar sale.
First, there was a first sale that qualified potential $5 candy bar buyers. People who buy hotel rooms are far more likely to spend $5 on a candy bar than the average man in the street.
Second, by its very nature, the hotel business keeps its customers engaged. Buyers consume what they buy.
If you rent a room, you’re most likely going to use it. It’s not the kind of sale where you buy the product and leave it in the box or add it to a stack of other purchases to maybe look at later.
Third, smart hotels deliver numerous sales messages to their customers after the sale. The mini-bar – silent and wordless – is just one example among many.
So while building and operating a hotel just to sell $1 candy bars for $5 is not a viable business plan, the principles behind the $5 candy bar sale are worth studying closely – and copying.
Principle #1: Some people will spend a premium price for a “good enough” product depending on the context. If you’re a small business, Job #1 for you is to figure out how to find these people and make them customers.
Principle #2: If you get the context right, you don’t necessarily need the world’s greatest ad copy or the world’s greatest product. “Good enough” is good enough (though selling a superior product in a superior way never hurt anybody.)
Principle #3: You’re probably not going to succeed selling $5 candy bars to random people on the street, but you can design a two-step sales process that attracts buyers who at the very least have the right profile to have the potential to make the purchase.
Principle #4: To trigger a transaction like this it’s not just enough to sell the product in step one of your two step process. You need to get your customer involved with the product. This will increase the chances that they will pay attention to your future sales messages.
Principle #5: Some will buy because they’re hair-trigger buyers and buy everything that way, but whatever the profile of your $5 candy bar buyer, you’ll never sell him if you don’t put your offer squarely in his face and figure out ways to keep it there repeatedly over and over for as long a period of time as you can possibly manage.
Can you do this with your your product?
If you give it a little thought, I’d be shocked if you can’t find ways to apply these principles to your business.
– Ken McCarthy
Founder of The System Seminar
CEO of The System Club
P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.
If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.
P.P.S. If you’re looking for new ways to sell more products, to more people, and at higher prices,
check this out