How to grow your brand’s value

How to grow your brand’s value by counter-intuitively charging more

When AppSumo.com started out, promoting the best online tools at a discount, the in me tried to price everything just 10% above our cost. So if we had to pay our partner $25 for selling their web tool I’d price it at $27.50. The rationale was lower prices = more sales = more customers and more growth. Right? 
This lunacy continued for some time until I decided to test if this really was true. 
Our first test: Doubling the margin. So now we sold the $25 product for $50. I was nervous but figured a test would give me good insight. Our daily email for awesome entrepreneur’s products was sent out (notice the shameless plug?) and I waited for the results….Queue drumroll.
 Conversions went up! 
Revenue went way up! 
Returns went down! 
Customer happiness went up!
 WTF was going on? My traditional “practical” alarm was going berserk. I talked to the customers, reviewed the data and came to some fascinating conclusions.
 We weeded out a lot of the bargain hunters. They may seem like “good” customers, but they don’t care about you long-term. If a cheaper option for something they want comes along, they’re out of here. Ever notice how Zappos is 10-20% more than any other place online. They don’t compete on price and as a result they get customers who don’t focus on that either
If we 10x the price or if the products sucked, then the increase in price would backfire. However, this wasn’t the case; the actual conversion rate for our customers went up. They care more about VALUE than price. Bowing to our Sumo-lings!

The Takeaway:

 It all comes down to value. Think about all the free PDFs you’ve downloaded vs. knowledge you’ve paid money for. Which do you prioritize to read? Exactly! You’re reading this and it’s good, but you would value buying a product 10x-100x more!