"Money is an idea"....
 

That's a quote from one of Robert Kiyosaki's books, I believe. I remember reading that, and wondering what it meant. I didn't quite figure it out.

But just last night, I had dinner with a friend, and he brought along one of his friends, John, too. All three of us are interested in these topics and we each read different books, go along to different seminars, etc., so we got together to share what we've learned....

John said something which struck a chord with me. He said....

"If one person thinks that something is worth a particular amount, and if he convinces everyone else that it is worth that amount, then it IS worth that amount."

This seems to be the essence of the thought that "money is an idea." What something is "worth" is what people THINK it is worth.

What people think something is worth can, of course, go up and down. (We've seen that with tech stock prices in the stock market during the past year, for example....) And because these thoughts can change, that's why "money is an idea"....

What do you think of this? Is this how you understand this thought too? I'd be interested in your feedback....

If you have an alternative understanding, I'd love to hear that as well.... :)

- Dien Rice

Re: "Money is an idea"....
 

The larger message being expressed, in my opinion, is the POWER of THOUGHT.

Years ago someone told me that "poverty is a state of mind!"

Now, since I knew bunches of poor folk, indeed, I was even thinking of MYSELF as one, I got kinda mad.

Later, I made to someone totally different a cutesy remark that "if I pay $300 for a suit, I'm leaving the tags on it!" This guy looked at me and quietly asked "Can't you afford a $300 suit?"

What blew me away was that I COULD! I had NEVER GIVEN UP THE POVERTY STATE OF MIND from which I'd risen.

Re: "Money is an idea"....
 

> The larger message being expressed, in my
> opinion, is the POWER of THOUGHT.

Wow, thanks! I think you're probably right, that probably is the ESSENTIAL message....

Your state of mind sure makes a lot of difference. We tend to build fences in our mind, beyond which we believe we can't go. Although these fences only exist in our mind, because they stop us from trying to do certain things, they are just as powerful as REAL fences are.

> Years ago someone told me that "poverty
> is a state of mind!"

> Now, since I knew bunches of poor folk,
> indeed, I was even thinking of MYSELF as
> one, I got kinda mad.

> Later, I made to someone totally different a
> cutesy remark that "if I pay $300 for a
> suit, I'm leaving the tags on it!" This
> guy looked at me and quietly asked
> "Can't you afford a $300 suit?"

> What blew me away was that I COULD! I had
> NEVER GIVEN UP THE POVERTY STATE OF MIND
> from which I'd risen.

Wow, thanks, that was a very good (and illuminating) story....

I'll tell a quick one about me. I tend to live relatively inexpensivly, since I prefer to invest my extra money (mostly into stocks).... Though I do allow myself the occasional "luxury" as most of us probably do....

Anyhow, until recently, I had never worn anything more than a $10 watch. Now, I wear about a $50 watch. (With a $10 watch, it's hardly worth replacing the battery when it dies because you might as well just get another watch.)

BUT, recently, I've been looking at high selling, yet low weight items on ebay (since I might want to sell them).... This brought me to a variety of high priced watches. Rolex Oyster Date, Omega brand, Tag Heuer.... These watches sell for thousands of dollars each. Wow, that blew me away!

Personally, I prefer to spend that kind of money on something else (to me, watches are just for telling the time), but it sure gives you a different perspective on what some people spend their money on....

When I think about it, I certainly could afford to wear such a watch if I wanted to, and I think that's part of the key. I know I could. I just prefer not to. But knowing I could if I wanted to, it makes quite a bit of mental difference. :)

- Dien Rice


An example of a high priced men's watch....

The Relativity Of Money
 

Hi Dien,

You are right.... Money and the value we place on anything are all relative, kind of like Einstein's theory of relativity in a way.

For example, real estate is only worth what people are prepared to pay for it at the time, and not what most people believe... That your house is worth what the market value is.

A friend of mine bought a house 6 months ago at $355,000... At the time there was another buyer who was equally interested in buying it, but the owner accepted my friend's offer first.
2 months later, the well heeled other buyer approached my friend and offered him $495,000!!! because he wanted it so badly... Although the market value of the home compared to houses of a similar design in the area had only risen by 5% above what he had paid.

The perceived value of money also depends on HOW much you have or don't have AND how QUICKLY it takes you to EARN it.

If something costs $1000 and it only takes a person one-hour to earn that amount... Then the value of the $1000 is of course perceived differently to a person who takes a month to earn it.

I always remember the famous line John Paul Getty once said (I'm pretty sure it was him?)...
"A billion dollars ain't what it used to be!"

I also believe that most people make their buying decisions based upon the price they pay for OTHER goods and services in their lives, products that may not necessarily be similar to the goods in question.... Rather than the benefits, quality or market value of the product being bought.

Then there are people who hate wasting CENTS but will not think twice in spending extra dollars.

For example... People who turn lights off when they leave a room for five minutes to save a few cents of electricity... But then spend an extra dollar on a pack of smokes at a convenience store rather than buy the pack at a discount supermarket???

Each one of us has a built in "yardstick" depending on the value we place on money and our existing wealth or earning capacity.

In marketing, I always apply what I call the
"Within the realms of reason" factor... In other words, when you price a product, you take into consideration the psychological value the majority of your target customers would be willing to pay, and not just the price of competing products or market values.

Sure... Salesmanship comes into it... If you are good enough you can sell products for much more than what they are really worth... But if a product is priced outside "the realms of reason" in your customer's mind it's going to be a hard sell indeed!

A good way to find out the perceived value of money for a given person is to ask the question..
"If you were to go to a casino... How much would you be prepared to lose at the roulette table, black Jack or the slots before you walked away?"

The amount of money a person is prepared to gamble and lose is a good indication of a person's ability to take a risk... Money wise.

If a person is prepared to lose $100 at the casino and walk away without blinking an eyelid.. Then it's not hard to sell that person an ebook for example for that amount or less, if you can convenience them it will make them money, etc.

Also people spend money based on "lots".
A "Lot" is an amount of money we "think in".

For example... I think in terms of "$100 lots", others may think in "units" of "$10" , "$1000 lots" or if you are Bill Gates "$10,000,000 lots".

What this means is that when I go to buy something, I "value" the product to the nearest "lot"... For instance, a $275 video player, in my mind in $300, a $8.75 pack of smokes is really $10, etc.

If I take a friend to lunch in a good restaurant...I think $100... Even though the bill might be $70.

Money.... It's really all about "units" of perceived measurement, earning capacity, status Quo, upbringing (our parents influence), economic times and value mix we equate to the spiritual and material world each of us have.

Then there is the ultimate definition of money...
"Money is TIME". Without TIME... There is no money, no matter how much you have.

Imagine winning a million dollars... With only a week left to live.

Then again... Imagine living lifetimes in a material world with no money at all as millions do.

Imagine a world with no money or where money is no longer is valued... The Celestine Prophecy, a book worth reading. Especially since the events of S11

Warmest Regards & $uccess

Ricky Higgs




1website1

The stock market "bubble" and the following "crash"... and how it comes from a change in beliefs....
 

Hi Ricky,

Thanks, that was a great post.... :)

A couple of other examples of the "relativity" of money came into my mind as I read your post....

One of the most common must be in the area of antiques. It's true that "one person's trash is another person's treasure".... An old telephone which one person thinks is only worth a dollar or two at the most, could be worth hundreds of dollars to someone else.... What it's worth is what people believe it is worth (and are willing to pay for it).

The other example was the high-tech stock market "bubble".... This really started with Netscape.

When Netscape floated, it was a company with no profits. However, Jim Clark had convinced everyone that the internet was the future (I think he was right), and that Netscape would be leading the way, which would turn into massive profits. People believed it, and the price of Netscape skyrocketed. Netscape was "worth" what people believed it was worth.

A lot of other high-tech companies then followed Netscape's example, where anything involved with the internet was thought to be worth a lot. The market valuation of these companies were what they were simply because that's what people believed.

Then last year, the market came crashing down. I think the "spark" seems to have been the court ruling against Microsoft. When that happened, it seemed to trigger the fall of all the high-tech stocks. Negative sentiment overcame the optimism, and what people thought high-tech stocks were "worth" changed dramatically. It was just a matter of change in belief.

However, the more evidence there is in favor of a "belief," the more likely it's going to spread and continue. And the less evidence there is in it's favor, the more likely that belief will probably collapse.... I think the high-valuation of high-tech stocks had a decreasing amount of evidence in favor or it, as internet companies struggled to make profits. And as more time went by without profits, the beliefs holding those prices up were gradually being eroded away....

I haven't read "The Celestine Prophecy" but I'll try to find a copy and check it out. Thanks Ricky, I really enjoyed your post! :)

- Dien

Re: "Money is an idea"....
 

> But knowing I
> could if I wanted to, it makes quite a bit
> of mental difference. :)

I truly believe that it's less KNOWING, than it is BELIEVING! (Or maybe they're the same thing!)

Everything that is not a part of "nature" is something that began as an IDEA in someone's mind. An IDEA that that someone BELIEVED in.

On another board (I won't say where) I've challenged a "proselytizer" to consider the notion that the story of Jesus' life was perhaps an ILLUSTRATION of what we might accomplish, if we believe. Belief - the concept, the process.

(I ain't no bible thumper, but the notion that Peter walked on water 'til he got scared of the storm won't leave my mind! That, and the fact that no one of us uses much more than 10% of the grey matter we have leads my grey matter into some interesting waters)

I'm believing into existence the life, wealth, happiness I want. Have to. With all my 'so-called' credentials, I ain't lookin' fuh no job!

Also...it's the "Greater Fool" Theory
 

> Hi Dien,

My wife used to have an Antique Shoppe. When we'd go to an auction or estate sale to buy items for inventory she would first determine what she THOUGHT she could get for an item, at retail...then divide by 2...to arrive at a "reasonable indicator or what to PAY".

Some high priced items though she would figure if she could get $200 to $300 more than what she paid, she'd buy it.

And ALWAYS with the thought in back of her mind of, "Are there greater FOOLS than I am who would pay more for this item than I did?"

Sometimes...she'd not be able to find a greater "fool" than she was and she'd have to take a loss on the item to recover part of her money.

Fortunately though she was most always able to find someone who'd be willing to pay more for her stuff than she did.

This is the same with anything...whether you create an item (or service) or buy it; Are there people who are willing to pay MORE for it than it cost you?

Don Alm

> You are right.... Money and the value we
> place on anything are all relative, kind of
> like Einstein's theory of relativity in a
> way.

> For example, real estate is only worth what
> people are prepared to pay for it at the
> time, and not what most people believe...
> That your house is worth what the market
> value is.

> A friend of mine bought a house 6 months ago
> at $355,000... At the time there was another
> buyer who was equally interested in buying
> it, but the owner accepted my friend's offer
> first.
> 2 months later, the well heeled other buyer
> approached my friend and offered him
> $495,000!!! because he wanted it so badly...
> Although the market value of the home
> compared to houses of a similar design in
> the area had only risen by 5% above what he
> had paid.

> The perceived value of money also depends on
> HOW much you have or don't have AND how
> QUICKLY it takes you to EARN it.

> If something costs $1000 and it only takes a
> person one-hour to earn that amount... Then
> the value of the $1000 is of course
> perceived differently to a person who takes
> a month to earn it.

> I always remember the famous line John Paul
> Getty once said (I'm pretty sure it was
> him?)...
> "A billion dollars ain't what it used
> to be!"

> I also believe that most people make their
> buying decisions based upon the price they
> pay for OTHER goods and services in their
> lives, products that may not necessarily be
> similar to the goods in question.... Rather
> than the benefits, quality or market value
> of the product being bought.

> Then there are people who hate wasting CENTS
> but will not think twice in spending extra
> dollars.

> For example... People who turn lights off
> when they leave a room for five minutes to
> save a few cents of electricity... But then
> spend an extra dollar on a pack of smokes at
> a convenience store rather than buy the pack
> at a discount supermarket???

> Each one of us has a built in
> "yardstick" depending on the value
> we place on money and our existing wealth or
> earning capacity.

> In marketing, I always apply what I call the
> "Within the realms of reason"
> factor... In other words, when you price a
> product, you take into consideration the
> psychological value the majority of your
> target customers would be willing to pay,
> and not just the price of competing products
> or market values.

> Sure... Salesmanship comes into it... If you
> are good enough you can sell products for
> much more than what they are really worth...
> But if a product is priced outside "the
> realms of reason" in your customer's
> mind it's going to be a hard sell indeed!

> A good way to find out the perceived value
> of money for a given person is to ask the
> question..
> "If you were to go to a casino... How
> much would you be prepared to lose at the
> roulette table, black Jack or the slots
> before you walked away?"

> The amount of money a person is prepared to
> gamble and lose is a good indication of a
> person's ability to take a risk... Money
> wise.

> If a person is prepared to lose $100 at the
> casino and walk away without blinking an
> eyelid.. Then it's not hard to sell that
> person an ebook for example for that amount
> or less, if you can convenience them it will
> make them money, etc.

> Also people spend money based on
> "lots".
> A "Lot" is an amount of money we
> "think in".

> For example... I think in terms of
> "$100 lots", others may think in
> "units" of "$10" ,
> "$1000 lots" or if you are Bill
> Gates "$10,000,000 lots".

> What this means is that when I go to buy
> something, I "value" the product
> to the nearest "lot"... For
> instance, a $275 video player, in my mind in
> $300, a $8.75 pack of smokes is really $10,
> etc.

> If I take a friend to lunch in a good
> restaurant...I think $100... Even though the
> bill might be $70.

> Money.... It's really all about
> "units" of perceived measurement,
> earning capacity, status Quo, upbringing
> (our parents influence), economic times and
> value mix we equate to the spiritual and
> material world each of us have.

> Then there is the ultimate definition of
> money...
> "Money is TIME". Without TIME...
> There is no money, no matter how much you
> have.

> Imagine winning a million dollars... With
> only a week left to live.

> Then again... Imagine living lifetimes in a
> material world with no money at all as
> millions do.

> Imagine a world with no money or where money
> is no longer is valued... The Celestine
> Prophecy, a book worth reading. Especially
> since the events of S11

> Warmest Regards & $uccess

> Ricky Higgs




22 Ways To Make $50,000 Starting with $50

Money allows you movement
 

I like this topic Dien...
I've always felt "everything I see belongs
to me" if "I desire it"...

Some people don't think they own anything
until they actually "possess it"(meaning
have it in their personal space)
I never felt that way; this is an abundant
universe and "money" just allows you to
move something from "one place" to another...

If I give you what you perceive as valuable;
then I can move what you have to the space
I want...

When I started looking at the space between
objects: I stopped feeling like I was lacking
anything...

Selling through the online auctions....
 

Hi Don,

Thanks for mentioning that.... As you know, I've done a bit of buying and selling myself (though not with antiques, mostly with computers and electronics). I found the thought process is similar to what you described.... How much can I sell it for? And after that, you can figure out the MOST you're willing to pay for it. And then, stick to that limit!

It's really a matter of knowledge, and becoming an "expert" in the resale values of items. Because of this, it's good to specialize....

You can make a living doing this, and it can be fun if you enjoy the kind of things you are dealing in.... With second-hand stuff, another bonus is that you can use it for a while before you resell it, if you choose to. (But the danger is you might grow too attached to it and never resell it. :) )

Online auctions have increased the possibilities too. I've found that selling over the online auctions is much easier than through the trader papers, at least for small, mailable items.... (When you do it this way, you also have to be sure you factor in the cost of shipping as well.)

Thanks again Don!

- Dien Rice

Re: "Money is an idea"....
 

great post Dien :)

To me, money symbolises one thing: CHOICES.

And in our society, you get a lot more of them with it, than without it :)

The Reality Of Money and Huh?
 

Money is NOT real. It work only because we all choose to believe in it as a legitimate buying/selling medium.

What would happen if suddenly the guy in the TV store wanted a piece of gold instead of notes? Of course you'd walk away and go to another TV store.

And if you wanted to pay with a nugget of gold the store owner would tell you where to go.

BUT, if we all changed. If we all lost our belief in the paper money...

> A good way to find out the perceived value
> of money for a given person is to ask the
> question..
> "If you were to go to a casino... How
> much would you be prepared to lose at the
> roulette table, black Jack or the slots
> before you walked away?"

Why is this a good way?

> The amount of money a person is prepared to
> gamble and lose is a good indication of a
> person's ability to take a risk... Money
> wise.

This is a false statement. Not true.

> If a person is prepared to lose $100 at the
> casino and walk away without blinking an
> eyelid.. Then it's not hard to sell that
> person an ebook for example for that amount
> or less, if you can convenience them it will
> make them money, etc.

I'll bet you $100 this is not true as well.

In fact, I'll bet you that $100 that the inverse is actually the case. The person who does not blink at losing $100 when Gambling is a Hard Sell on an info product. And even harder on an eBook!

In fact, research indicates a direct correlation between non-gambling and success and gambling and non-success. In other words, successful people do NOT gamble while unsuccessful people Do.

You only have to look at the gamblers to see this. And read Stanley's Millionaire Next Door series. He discovers this as well.

> Also people spend money based on
> "lots".
> A "Lot" is an amount of money we
> "think in".

Sorry, disagree with this.

That's why things end in 99... because people don't think in these "lots". It ends in 99 and we generally think of the number BEFORE the 99, not up.

$8.99 is eight bucks to us. $299 is two hundred to us.

Michael Ross.

Money is NOT real, gamblers, "99".... Huh?
 

> Money is NOT real. It work only because we
> all choose to believe in it as a legitimate
> buying/selling medium.

Money... Paper money IS VERY REAL!
Before paper money, people used to have to carry heavy bags of silver, gold and even salt.
Paper or even plastic money (credit and debit cards) is for convienvence. Today we are fortunate enough to live in a world where you can buy and sell goods and services without any physical money changing hands. Just debits and credits between our bank accounts.

Money is simply an "I.O.W" we can exchange for goods and services... The real value is backed by the issueing Government.

Money makes it fairer for all of us.... In the caveman days, life was not as fair...
If I was good at making "spearheads" and you were good at hunting... We could trade what we were good at... You give me meat to eat, because you are a good hunter and in return I make you the weapons to hunt.
However... The poor caveman who was good at nothing, with no trade to "swap" or barter... Would starve to death. So instead of swapping services we all agreed to a unit of universal exchange...Call it paper money, salt, gold, silver... At the end of the day they are only "I.O.W's" we all agree to accept for whatever services or goods we offer.

> What would happen if suddenly the guy in the
> TV store wanted a piece of gold instead of
> notes? Of course you'd walk away and go to
> another TV store.

It used to be that way less than one hundred years ago and during the war years.

> In fact, I'll bet you that $100 that the
> inverse is actually the case. The person who
> does not blink at losing $100 when Gambling
> is a Hard Sell on an info product. And even
> harder on an eBook!

I've sold lots of ebooks to associates who are gamblers.

> In fact, research indicates a direct
> correlation between non-gambling and success
> and gambling and non-success. In other
> words, successful people do NOT gamble while
> unsuccessful people Do.

I have to disagree... Successful people are "risk takers", and some of the wealthiest people in this world are gamblers.

Take Australia's richest man, Kerry Packer, not only is he a "high roller" betting in $100,000 "lots" but he also owns the Casino in Melbourne.

If successful rich people were not gamblers, then explain why every casino in the world caters for the high rollers with special gambling rooms set aside to service these "rich" clientele.

The difference between being a success and a failure is often the case of being prepared to take a "risk"... A calculated risk maybe... But in essence "risks are a "gamble" ... Life itself is a gamble everyday of our lives. We can chose to be a player or non-player in the game of life.

> That's why things end in 99... because
> people don't think in these
> "lots".

The real reason prices end in "99" is not what most people believe it's for... A marketing ploy to make things sound cheaper.... No. Sir.

It all started years ago, when supermarkets realized that if they were to price a product at $5.00 or $10 even... Then it would be easier for the shop assistants.. The people on the check out cash registers to "pocket the money"!!!

You see if a product was priced at $9.99 instead of $10.00... It would FORCE the assistant to OPEN the cash register, place the $10 bill in the tray and GIVE the customer their ONE CENT change!!

(Most customers of course would never hand over the EXACT amount of $9.99, always a $10 or a $20 note FORCING the assistant to give them change).

When products were priced at EVEN amounts, stores lost thousands of dollars due to the customer handing over the EXACT AMOUNT and not waiting around for change or a receipt....The cashier would not have to open the till infront of the customer and therefore the temptation existed to pocket the money!!

> $8.99 is eight bucks to us. $299 is two
> hundred to us.

I think most people are smart enough to realize that $299 is $300 and would not round down to $200.

Warmest Regards & $uccess

Ricky Higgs

Double Huh?
 

I wrote: Money is NOT real. It work only because we all choose to believe in it as a legitimate buying/selling medium.

Then, after your effort to prove me wrong, you agree with me: "At the end of the day they are only "I.O.W's" we all agree to accept for whatever services or goods we offer."

> I've sold lots of ebooks to associates who
> are gamblers.

Bully for you. What were those books? How to win at gambling?

> I have to disagree... Successful people are
> "risk takers", and some of the
> wealthiest people in this world are
> gamblers.

Yes they are. BUT, the were successful and wealthy BEFORE they gambled.

> Take Australia's richest man, Kerry Packer,
> not only is he a "high roller"
> betting in $100,000 "lots" but he
> also owns the Casino in Melbourne.

Again, successful BEFORE he was a gambler.

> If successful rich people were not gamblers,
> then explain why every casino in the world
> caters for the high rollers with special
> gambling rooms set aside to service these
> "rich" clientele.

Sure I'll explain it... even though you dodged my question from the previous post...

Because they made their money BEFORE they decided to use it in the enjoyment they get from the atmosphere at the casino.

Geeze Ricky, if what you say was true, then there must be a real lot of successful people in Australia. You can see them all over the place. At every poker machine in every club. Every TAB all over the country. Every Saturday at the newsagents buying their lotto and scratchies.

Look. Admit you made a boo boo and move on. Trying to defend your position is a no-win situation.

> The real reason prices end in "99"
> is not what most people believe it's for...
> A marketing ploy to make things sound
> cheaper.... No. Sir.

Oh... well I guess all those price tests all throughout the years are wrong then, hey? I guess Ted Nicholas didn't know what he was on about by ending all his stuff in a 7. If only he knew what you do, he could have saved himself hundreds of thousands of dollars testing his price points to see what worked best. (can you feel the sarcasm?)

> I think most people are smart enough to
> realize that $299 is $300 and would not
> round down to $200.

You think? Means you don't really know. All you need to do is LISTEN to the WORDS people use. MOST people refer to an item which sells for $299 as $200. Listen and you will here it.

Whatever. I can't be bothered with this any more. It's a pointless discussion.

Have a nice day :o)

Michael (I wonder if Ricky is going to respond to get the last word in, knowing that I'm done with this discussion) Ross.

Controlling money, rather than being controlled by it....
 

Hi Sandy!

Thanks for sharing your point of view, it's a refreshing way to look at things.... :)

I agree with you that the universe is abundant... There really is plenty to go around. One of the interesting things about creating things to sell, and buying and selling (as a trader), is that I think you get a better handle on how money really works....

As an employee, I think you never really learn it. At least I didn't as an employee! Money just appeared in my bank account and I didn't think about it further....

Most people sell their services as employees, but I think it's instructive to try out some of the other ways of making money too, to get a better idea of how it all works.

Because of a fear of money, many allow it to control their lives.... But with experience, you learn to get on the other side of the table, so that you're doing the controlling, rather than being controlled....

- Dien

Re: Controlling money, rather than being controlled by it....
 

Dien -

> Because of a fear of money, many allow it to
> control their lives.... But with experience,
> you learn to get on the other side of the
> table, so that you're doing the controlling,
> rather than being controlled....

And that, of course, was also one of Rich Dad's points about moving to the right side of the Cashflow Quadrant.

Rick Smith, "The Net Guerrilla"


The Home for Guerrilla Product Developers

Re: The Reality Of Money and Huh?
 

Michael -

> That's why things end in 99... because
> people don't think in these
> "lots". It ends in 99 and we
> generally think of the number BEFORE the 99,
> not up.

> $8.99 is eight bucks to us. $299 is two
> hundred to us.

And some will remember the testing Ted Nicholas did to find out if it made a difference in sales whether the price ended in 97 or 99.

Rick Smith, "The Net Guerrilla"

Re: Money is NOT real, gamblers, "99".... Huh?
 

Uh, Ricky...

> Money... Paper money IS VERY REAL!
> Before paper money, people used to have to
> carry heavy bags of silver, gold and even
> salt.

> Paper or even plastic money (credit and
> debit cards) is for convienvence. Today we
> are fortunate enough to live in a world
> where you can buy and sell goods and
> services without any physical money changing
> hands. Just debits and credits between our
> bank accounts.

> Money is simply an "I.O.W" we can
> exchange for goods and services... The real
> value is backed by the issueing Government.

You're contradicting yourself. First you said that paper money is real. Then you said that paper and plastic money is for convenience and we all just swap debits and credits between our bank accounts and physical money doesn't have to change hands. Then you said that money is simply an IOU and that the real value is backed by the issuing government.

I've recently been doing a little study on this whole matter so perhaps I can help.

Paper money is based on a concept called "fiat currency." Fiat currency only works when *people*, (that is those that receive the notes of the issuing government), have confidence in the issuing government. It really has nothing to do with being "backed by the issuing government." Since no government in the world, (that I know of), now backs their paper money with a precious metal standard, the only thing the governments have with which to back the fiat currency is the goodwill of the people towards them. So it gets back to the confidence of the people in the government which issued the notes. A good example of this is what happened with Weimar Republic marks in Germany, (I believe it was after WW I). The legend goes that a woman was hauling a wheelbarrow full of money down the street. She stopped somewhere and left the wheelbarrow full of money outside an establishment. Someone came along and stole the wheelbarrow. Now, I don't know if there's any truth to the legend itself but my reading of history tells me the concept is correct.

> I think most people are smart enough to
> realize that $299 is $300 and would not
> round down to $200.

It's not an issue of being smart or not smart. It's an issue of psychology. There have been numerous tests that have proven, in general, people are more inclined to buy a product that ends in 99 than one that is rounded up to the next dollar. Ted Nicholas went even further and proved that, in general, the people that bought from him and his clients were more inclined to buy a product ending in 97 than the same one ending in 99. But like all issues in marketing, your mileage may vary and as always, we have to test for our own situations.

Rick Smith, "The Net Guerrilla"


Where We Discuss REAL Guerrilla Product Development Techniques

Rounding up versus rounding down....
 

Hi Rick,

Thanks, an interesting post! :)

> It's not an issue of being smart or not
> smart. It's an issue of psychology. There
> have been numerous tests that have proven,
> in general, people are more inclined to buy
> a product that ends in 99 than one that is
> rounded up to the next dollar.

I agree, I think the fact it works is because most of us are mentally lazy when we think we can get away with it.... It takes a little bit of extra thought to realize that $2.99 is almost $3.00, but it takes less mental work to just ignore the $.99 and round it to $2.00 !

So, I think that's what many of us do.... and that's probably why it works. Like you said, Rick, it's not a matter of intelligence but rather of psychology.

> Ted Nicholas
> went even further and proved that, in
> general, the people that bought from him and
> his clients were more inclined to buy a
> product ending in 97 than the same one
> ending in 99.

Wow, I didn't know this. Is this in "The Golden Mailbox", or in another book of his?

> But like all issues in
> marketing, your mileage may vary and as
> always, we have to test for our own
> situations.

That's true... It seems that as time goes by some of the rules change, though I believe the basics of human nature don't change by too much. :)

- Dien Rice

Let’s talk about “nonomania”!
 

Hi Rick,

“Nonomania” … Or the “9-fetish”… Or in this case the 99 psychology in pricing.

Rick, since you have entered this thread in a more mature way than someone else who resorts to sarcasm bordering on personal attacks when opposing arguments are presented, I’ll re-enter this discussion.

BTW, I’m used to it by now, it used to be quite common when I posted on another “famous” board, however instead of “biting back”, I gave that person full credit in my much trafficked “Who’s who” list, and still do, even though he has technically retired from the net. I’m also used to sarcasm…. “R.C. Collins” did a fine job of that on a number of discussion boards recently ;-)

Okay… Let’s talk about Ted Nicholas….

Yes, Ted did do testing and research to find out if it made a difference in sales whether the price ended in 97 or 99.
And Yes, he proved that, in general, the people that bought from him and his clients were more inclined to buy a product ending in 97 than the same one ending in 99.

But strangely, few business people and retailers have taken his good advice?

Researchers discovered that the digits “one”, “three” and “seven” are the rarest price-endings and that the prevalence of prices ending with 99 is a purely a Western phenomenon. Chinese, Japanese and other Asian countries shy away from using “nines” in pricing.

Culturally, for many, many years, the Chinese did not use the digit nine for anything,” The “nine” was reserved for the emperor.” Chinese restaurants for instance, typically end menu prices with a six or an eight, digits that are also easier to add or subtract then odd numbers like nine.

The type of currency used in many Asian countries reinforces the reluctance to use nines. It takes so many yen or yuan to order a even just a meal in Japan or China that a single cent doesn’t mean as much as it does in the United states or Australia for example.

Did you know also that a lot of research has been done on the psychological effects “99 cent price endings” have with consumers?

For example, Ohio State University researchers have been studying consumers’ perceptions of 99-cent endings in restaurant pricing. They researched the effect menu prices had on consumers, in terms of prices ending in 99 as against “whole dollars”.

What they found was that although the one cent difference may not be valued very highly by itself, when it is part of a price on a menu, it can be worth a lot in terms of a customer’s opinion of a restaurant.

The university researchers concluded that diners associate 99-cent price endings with VALUE, while a whole-dollar price is more likely to inspire thoughts of QUALITY.
So a $4.99 hamburger has the psychological effect of being a BARGAIN, while a $5 hamburger must be really good and of better QUALITY.

The researchers collected menus from 231 restaurants in the Columbus area to look for trends. They then gave 73 people one of three versions of identical menus—with different prices—to determine if the one-cent difference evoked feelings of “quality” or “value.”

They discovered that high-end, fine dining restaurants should stay away from using menu prices ending in 99, 98 or 97 cents, as it gives a conflicting image…. You could be insulting the consumer!

Fast food and casual dining restaurants on the other hand can use this psychologically “price lowering 99 cent” ploy as they are selling VALUE for money rather than projecting the image of QUALITY. They are focusing on keeping everything as cheap and value-oriented as possible.
How a retailer, offline business or online marketer, “prices” their products can tell a customer a lot about the “priorities” of the business. For example on my own website, I decided to price my latest info-pack at a “whole” $10 rather than the psychologically quality lowering $9-99 or $9-97.

As I always say, the proof of the pudding… The real test…. Is in the results obtained…. Guess what, without blowing my horn, or trying to self promote myself here on Dien’s good forum… It’s going “gangbusters”… I can hardly keep up with the daily manual entry of credit card orders in my Bank merchant account paperwork!

Why are so many marketers and retailers resorting to using the “99 cent” pricing strategy?

Well according to the research by Professor “H.G. Parsa”… It appears that it’s simply a case of
“monkey-see, monkey-do”…. It’s being going on for so long in the retail world that few people stop to think about the “QUALITY” versus “VALUE” issue, and the image they are portraying for their business!

Other pricing research has also found that consumers are IGNORING prices that end with “9” BECAUSE people ignore THE LAST DIGIT!

In their analysis, the researchers statistically accounted for factors such as brand loyalty, advertisements, and the impact of in-store displays so they could focus just on how consumers processed the price information. They found that the best explanation for the purchase decisions was that consumers processed prices from LEFT to RIGHT -- and stopped at the first digit that was different when comparing two prices. For example, if a consumer compared prices for two competing products…. one $1.59 and the other $1.64 …. They would notice the difference between the middle digits (the "5" and the "6") and not pay attention to the final digits of the prices!

As far as what I originally said about how the “99 cent pricing” has been used in “retail store security”…
> It all started years ago, when supermarkets realized that if they were to price a product at $5.00 or $10 even... Then it would be easier for the shop assistants.. The people on the check out cash registers to "pocket the money"!!!
You see if a product was priced at $9.99 instead of $10.00... It would FORCE the assistant to OPEN the cash register, place the $10 bill in the tray and GIVE the customer their ONE CENT change!!

This is still true… I learnt this back in 1979 when I served my “consumer marketing apprenticeship” in the retail world. This was taught to me by the marketing manager of a large food chain (Known as “Coles Myers” in Australia… One of our countries largest retailers).

So while Ted Nicholas might have been conducting experimental price marketing on the “99 – 97 “ cent issue…. The same pricing strategy was being used for different reasons in the retail world.

I could go on and on about pricing … It’s uses and emotional effects on consumers, but I think you get the picture.

Warmest Regards & $uccess

Ricky Higgs




More Than $9-97... But Selling Like Hot Cakes!

Re: Let’s talk about “nonomania”!
 

Ricky -

> But strangely, few business people and
> retailers have taken his good advice?

I would suspect that if you asked most retailers and business people about Ted's testing, they would say, "Ted who???" There's a fairly good reason for that. As well known as Ted is to many of us, Ted is still relatively unknown outside a fairly small circle of direct response marketers. That's because Ted focused on direct response marketing; not general business or retail.

> They discovered that high-end, fine dining
> restaurants should stay away from using menu
> prices ending in 99, 98 or 97 cents, as it
> gives a conflicting image…. You could be
> insulting the consumer!

Interesting. But since I have never tried to market anything in a high-end, fine dining restaurant, I personally wouldn't worry much about this. My focus is on how much people want to pay for my infoproducts. And Ted's results speak much more directly to this issue.

> As I always say, the proof of the pudding…
> The real test…. Is in the results obtained….
> Guess what, without blowing my horn, or
> trying to self promote myself here on Dien’s
> good forum… It’s going “gangbusters”…

Yes, but did you test the different price points by using rotating order forms or by some other method? Just because the product is selling well at $10.00, means nothing in and of itself unless you have tested it against the other price points. It might sell better at one of the other price points. It might sell better at $19.97.

>I can
> hardly keep up with the daily manual entry
> of credit card orders in my Bank merchant
> account paperwork!

I'm curious as to why you're not using one of the many automated methods of credit card payment.

Rick Smith, "The Net Guerrilla"


Guerrilla Product Developer's Discussion Where We ALWAYS Round Up!

Thinking in "lots"....
 

Hi Ricky,

This was an interesting post.... It made me think. :)

> A "Lot" is an amount of money we "think in".

> For example... I think in terms of
> "$100 lots", others may think in "units" of "$10" ,
> "$1000 lots" or if you are Bill Gates "$10,000,000 lots".

I've been thinking about this, and I think you're right here.... I think we do tend to think in "lots" to a large degree.

I've been observing my own thinking. I tend to think in $100 "lots" too.... But the way I think it manifests itself is that amounts below that "lot" I don't think very much about. It's below the "threshold" where I worry about spending it....

It also seems to affect whether I think I have a lot or not. If I think in $100 lots, if I have a few hundred bucks in my wallet, I feel I have a lot of money. But if I thought in terms of $1000 lots, I'd probably think it wasn't very much....

I know when I was a kid, I thought in terms of 10-cent lots, then in terms of $1 lots. As I got older, and was an undergraduate university student, I thought more in terms of $10 lots. And now, it's more like $100 lots. Hopefully, in the future it will be more like $1000 or $10,000 lots. :)

I wonder if what kind of "lots" you think in could affect how you approach business? For example, if you think in $10 lots, you might be satisfied making a $10 profit per product sold. But if you thought in terms of $100 or $1000 lots, you might be more likely to look for products where you make a $100 or $1000 profit instead.... There could be some interesting and useful psychology happening here. If you could change your thinking in terms of what kind of "lots" you think in, would it affect your profits?

It's interesting food for thought!

- Dien Rice

I'm Baaaaaaaaaaack!
 

Ricky -

> Rick, since you have entered this thread in
> a more mature way than someone else who
> resorts to sarcasm bordering on personal
> attacks when opposing arguments are
> presented, I’ll re-enter this discussion.

If you want to call me immature and accuse me of resorting to personal attacks when rebutting arguments, then come right out and say it. Don't do it in this sneeky way.

And for the record.... as far as I am concerned, the moment you were a smartass first all gloves were off. Okay?

> BTW, I’m used to it by now, it used to be
> quite common when I posted on another
> “famous” board, however instead of “biting
> back”, I gave that person full credit in my
> much trafficked “Who’s who” list, and still
> do, even though he has technically retired
> from the net. I’m also used to sarcasm….
> “R.C. Collins” did a fine job of that on a
> number of discussion boards recently ;-)

You've become used to sarcasm? Why should you have to become used to it? If it's happening that much to you that you have to become used to it, have you ever thought WHY?

Like maybe, whether you know it or not, you are in some way eliciting this.

And you cry afoul and "hard done by" then show us all how nice you are. There's a term for people who do that. It's called Psychic Vampire...

Psychic Vampire (brief version): A person who practices the fine art of making others feel indebted to them. Many psychic vampires will give you things for the express purpose of making you feel you owe them something in return, thereby binding you to them. And then use this as a "tool" to extract sympathy and obligation. Many acting "crushed" and dropping hints of all they have done, as their prefered weapon.

Michael Ross

Let's stop with
 

the sarcasm, name calling, etc. here....

I think it's okay to disagree, but let's disagree in a respectful way....

(This is directed to everyone in general.)

Thanks

- Dien

Stop. In the name of sowPUB
 

Hi Dien!

Thanks for the reminder. Me thinks I should "count to ten" sometimes.

Michael Ross.