profit of the stores. There you go! That’s everything!
A great story, but overtaken by the present. It started like that in the Middle Ages, perhaps. Now greed rules with an iron fist.
SOLUTION: A particular model of cell phone can be sold for one dollar, or for three hundred, although the production cost is eight. Yes, there are many ifs and buts attached to the lowest price but much of the value is up in the air.
Any item is only worth what customers in large numbers (who know of its existence and location, in other words exposure) are willing to pay for it.
Think this over. The price is accepted or declined by groups of customers. If they decline unanimously, we are forced to lower the price we came up with.
The decision-makers of multinationals who introduce a new product venture a guess at what is the highest price Joe Public will accept. First there is the group of eager ones, who are willing to pay top price for the latest model. When sales calm down, they direct their attention to the next group who can take it or leave it. Meanwhile, they make a new range for the ones who always want the latest model. Last to be served are the bargain hunters, who are getting model one when edition three is out. When the price fall has bottomed out the item is discontinued.
FACT 12: Prices and proposals are not accepted on merit, but on presentation
It is no wonder that the manner of price presentation gives many subliminal messages.
The ladder of price acceptance
FOCUS: Getting a price accepted
ELABORATE: We are well aware that some values are accepted without discussion while similar ones are refused. Why is that?
SOLUTION: The likelihood of any price getting accepted is:
Can you see where this is going?
This is exactly how major retailers deal with their customers!
Because they know that the easier it appears to change a price, the more likely it becomes that people want to try it.
We are all so susceptible to this kind of mind control that when a sign hangs high, or is laminated with a bar code, we automatically assume the numbers are beyond our power.
Why try and make a fool of ourselves? There is nothing that scares us more, not even overpaying.
The ladder of business proposals
The same rules apply for business proposals: the likelihood that we will accept a proposal is, from low to high:
1 Oral offers.
2 Written by hand.
3 Typed.
4 Printed.
5 Printed with calculations to prove basis.
6 Written in stone, but more practical is – laminated. The information becomes untouchable. Add a bar code, now the logic behind the price is unreadable too.
7 Printed with valuations from a “neutral” source, with signatures and explanations.
8 All of the above plus a Story2Tell others. So you can explain how you could make such a great deal.
We are likely to discard a proposal, regardless of the content:
Not surprisingly, this applies during negotiations. You adjust your price based on your hunch on how much the other party is willing to settle for.
Remember Negonomics earlier in this chapter? Seemingly random numbers send the subliminal message that your calculation stands on solid ground while fabricated prices should be seen as an open invitation to a game of bartering. So “smart” pricing may be unwise when dealing with the ones who have a high EQ.
Example
Say you calculate a price of 341,300. Most people will make it 349,500 in a soft market and maybe 10,000 more in a stronger one. Now imagine the smart buyer’s thoughts. The first 341,300 number appears to have a basis in fact. Their attention goes to the inflated price of 349,500. The 49, especially when followed by a 500 or 950 or 995, leads them to conclude that the number 349,500 is a fabricated one. Now I will ask you questions to establish the range of possible buffers because I am positive they are added.
Estimations without calculations
If there is only one specific item like some unique real estate or work of art, this means you also only need just one buyer to be willing to pay it. When there
