Interview with Internet marketing guru Harmony Major

Q. Have you found a way to charge different prices to different buyers?

A. I always try to have different pricing levels for my products, which really can increase your response and conversion rate. Especially when your products/services are priced higher than normal. We have to realize that there are people who’ll need each and every service you include in that “premium” product, but that there are others who may not want to pay your premium price just to acquire or use a product or service that they’d only have use for PART of.

Because a lot of the times, it’s not about whether or not your prospect has the money for what you’re offering. It’s about whether or not they feel that the price they’re paying justifies how many of the “pieces” of your product they’ll actually use.

I’m not sure I explained that well, so let me give an example. More

Pricing structure for new products
Pricing structure for new products

Are your discount levels hurting your sales?

The best way to determine optimal discount levels is to systematically test alternatives in the marketplace, as do direct marketers. Other marketers, under time constraints, often use less systematic methods to determine discounts – such as industry convention, competitive response or historical precedence.

Using unsystematic methods of setting discounts may result in three potentially negative outcomes:

  • Even if the discount achieves a managerial objective (e.g., to sell X units, increase sales by X%, etc.) – you can’t know if a smaller discount would achieve a similar sales response but with a higher profitability.
  • The deeper discounts used may be associated with a lower perception of quality, which may discourage some consumers from buying, thus lowering your unit sales potential.

A lowered perception of quality may affect brand loyalty.