Duane Adolph
July 2, 2007, 05:10 AM
Dan Kennedy Quote: "Most marketers underestimate the price elasticity of their offers."
Hi Ankesh,
Here are a couple of things I would consider.
#1 You said the property "made news".
- If this news is what is driving the demand, I would want to know how much longer it would generate interest for...and What specifically about the news caused the 2 offers
- Is this "news" that YOU control ie. Press Release...email blast etc. etc.
If it is something that YOU can control or Manufacture...Then your price is elastic.
#2 1st offer $65,000 ...2nd offer $243,000?
- Pretty large difference in perceived value? Or was the 1st offer just the standard "low ball" negotiation tactic?
- What evaluation criteria are your prospects using to determine the value of the property?
- Who is shaping that perception? How are the doing it ie. what medium?
#3 You asked "How do I find out if the prices will increase or if this is the best offer I can get?"
- Why not PICK YOUR OWN Price and figure out how to make it 10 times more valuable to your prospects.
Here's what I would do:
First: Without looking at the market...figure out How much You really want from the property and by when. (My Personal TARGET NUMBER)
Second: Look at other comparable properties and determine on average what the going rate for the property is.
Third: Look at the "TOP DOLLAR AMOUNT" that a comparable property has gone for; if this is possible to determine. (That is your BENCHMARK NUMBER)
Fourth: I would aim to BEAT the benchmark. As long as the price I got was greater than (MY Personal TARGET NUMBER) And or the (BENCHMARK NUMBER)
I would be extremely excited.
Fifth: Create An OFFER that is Perceived to be 10x times more valuable to the prospects
With Your Marketing Brain, Ankesh..I'm sure you can come up with ways to Increase the perceived value of your property while stimulating demand.
The words Scarcity and Urgency come into my mind....
You did say the property was..."One of a kind"... right :->
Duane Adolph
========
Ankesh Just found these words of Wisdom from Dan Kennedy in regard to price. I'll just cut and paste .
Mistake #2: Setting The Wrong Price. It is not true that the lowest price is the right price. Products cost more at the 7-11 than at the supermarket and everybody knows it, but many people are cheerfully willing to pay the premium for convenience. A book could be filled with similar examples from every business category, where consumers knowingly and gladly pay a higher price for a commodity because of some added or secondary value. Many factors must be considered before arriving at the best asking price for any product or service. You can, of course, proceed by testing one price against the other in controlled marketing situations. And once you have significant success at one price, you should test inching up that price. (Beyond that, there are some very sophisticated methods for setting prices - I'll soon be interviewing Marty Chenard on a Gold Tape about this very subject. DSK.) Here are a few quick price tips:
(1) Most marketers underestimate the price elasticity of their offers.
(2) Price is never the determinate factor; perceived value in excess of price is.
(3) You can sell at prices higher than your competition - for egs., by preventing apples-to-apples comparisons via bundling and packaging, premiums, other added value, proprietary branding, or emphasizing peripheral factors rather than the core product, such as guarantees .
(4) For many buyers, the monthly payment figure is more important than the total price There are two scenarios that permit demanding an exceptionally high price: one, when the popularity, need or desire for the product or service is at peak, and you are (perceived as) the only source --- for example, having a revolutionary new weight loss product everybody is talking about; selling a new car model made in very limited quantity. Two, when you are "selling money at a discount" i.e. offering thoroughly documented return on investment far in excess of the price.
http://www.dankennedy.com/cblog/index.php?/archives/2005/11.html
This may be one of the questions that has no definite answer. So I'll pose it as a poll.
If you own a real estate property and are willing to sell it for $125,000 one year back.
But you can't sell that property for over a year. But then, within a week, you get 2 offers.
First offer is for $65,000.
Second offer is a cool $243,000.
Obviously, you reject the first offer. But do you take the second offer? Or do you wait - expecting the market to become even hotter - with the recent activity?
(Assume that yours is a one of a kind property and there is no market comparison. Also assume that the recent activity is not a coincidence. The property has made news.)
How do I find out if the prices will increase or if this is the best offer I can get?
What would you do? Sell or wait?
(This is not a theoretical question. I actually face this problem right now - but its not for real estate. Your opinion would help a lot.)
Hi Ankesh,
Here are a couple of things I would consider.
#1 You said the property "made news".
- If this news is what is driving the demand, I would want to know how much longer it would generate interest for...and What specifically about the news caused the 2 offers
- Is this "news" that YOU control ie. Press Release...email blast etc. etc.
If it is something that YOU can control or Manufacture...Then your price is elastic.
#2 1st offer $65,000 ...2nd offer $243,000?
- Pretty large difference in perceived value? Or was the 1st offer just the standard "low ball" negotiation tactic?
- What evaluation criteria are your prospects using to determine the value of the property?
- Who is shaping that perception? How are the doing it ie. what medium?
#3 You asked "How do I find out if the prices will increase or if this is the best offer I can get?"
- Why not PICK YOUR OWN Price and figure out how to make it 10 times more valuable to your prospects.
Here's what I would do:
First: Without looking at the market...figure out How much You really want from the property and by when. (My Personal TARGET NUMBER)
Second: Look at other comparable properties and determine on average what the going rate for the property is.
Third: Look at the "TOP DOLLAR AMOUNT" that a comparable property has gone for; if this is possible to determine. (That is your BENCHMARK NUMBER)
Fourth: I would aim to BEAT the benchmark. As long as the price I got was greater than (MY Personal TARGET NUMBER) And or the (BENCHMARK NUMBER)
I would be extremely excited.
Fifth: Create An OFFER that is Perceived to be 10x times more valuable to the prospects
With Your Marketing Brain, Ankesh..I'm sure you can come up with ways to Increase the perceived value of your property while stimulating demand.
The words Scarcity and Urgency come into my mind....
You did say the property was..."One of a kind"... right :->
Duane Adolph
========
Ankesh Just found these words of Wisdom from Dan Kennedy in regard to price. I'll just cut and paste .
Mistake #2: Setting The Wrong Price. It is not true that the lowest price is the right price. Products cost more at the 7-11 than at the supermarket and everybody knows it, but many people are cheerfully willing to pay the premium for convenience. A book could be filled with similar examples from every business category, where consumers knowingly and gladly pay a higher price for a commodity because of some added or secondary value. Many factors must be considered before arriving at the best asking price for any product or service. You can, of course, proceed by testing one price against the other in controlled marketing situations. And once you have significant success at one price, you should test inching up that price. (Beyond that, there are some very sophisticated methods for setting prices - I'll soon be interviewing Marty Chenard on a Gold Tape about this very subject. DSK.) Here are a few quick price tips:
(1) Most marketers underestimate the price elasticity of their offers.
(2) Price is never the determinate factor; perceived value in excess of price is.
(3) You can sell at prices higher than your competition - for egs., by preventing apples-to-apples comparisons via bundling and packaging, premiums, other added value, proprietary branding, or emphasizing peripheral factors rather than the core product, such as guarantees .
(4) For many buyers, the monthly payment figure is more important than the total price There are two scenarios that permit demanding an exceptionally high price: one, when the popularity, need or desire for the product or service is at peak, and you are (perceived as) the only source --- for example, having a revolutionary new weight loss product everybody is talking about; selling a new car model made in very limited quantity. Two, when you are "selling money at a discount" i.e. offering thoroughly documented return on investment far in excess of the price.
http://www.dankennedy.com/cblog/index.php?/archives/2005/11.html
This may be one of the questions that has no definite answer. So I'll pose it as a poll.
If you own a real estate property and are willing to sell it for $125,000 one year back.
But you can't sell that property for over a year. But then, within a week, you get 2 offers.
First offer is for $65,000.
Second offer is a cool $243,000.
Obviously, you reject the first offer. But do you take the second offer? Or do you wait - expecting the market to become even hotter - with the recent activity?
(Assume that yours is a one of a kind property and there is no market comparison. Also assume that the recent activity is not a coincidence. The property has made news.)
How do I find out if the prices will increase or if this is the best offer I can get?
What would you do? Sell or wait?
(This is not a theoretical question. I actually face this problem right now - but its not for real estate. Your opinion would help a lot.)
