Everyone Hates Marketers | No-BS Marketing & Brand Strategy Podcast

Louis: Bonjour, bonjour and welcome to another episode of Everyone Hates Marketers. com, the no fluff actionable marketing podcast for people sick of marketing bullshit. I'm your host, Louis Grenier. In today's episode, you will learn the truth about pricing, how to apply behavioral economics, so customers buy, it's a theme we haven't really talked about in the podcast.
And I will admit probably my weakest parts, in my marketing knowledge, should I say, I'm not that good at it. I wing it a lot. So I can't wait to dive into today's episode with my guest today, who's the host of the brainy business podcast, which is recommended alongside Everyone Hates Marketers in most podcasts apps.
She's an applied behavioral economist. She also teaches at the Texas A& M university. Author of three books, and the latest is The Truth About Pricing. Melina Palmer,
Melina: Oh, thanks for having me. Excited to be here.
Louis: So which number should I earn my prices with, right? Should I earn it with zero, seven?
Which one will give me the most sales?
Melina: See, so we're just right off the bat going into my, you know, potentially new trademarked response of it depends, you know, so it would depend. And one of the big points of clarification I talk about in the book is for people to know if you want to be a quality business or a value business, and both feel like they're good and you feel like you want to be somewhere in between, say, I want both quality and value, but you have to pick, one, so if you want to be on the quality side to where, you know, it's about the great products, luxury, selling to celebrities, looking at gifts, see some of these sorts of things, you'd be on that quality rounded numbers are going to do better for you. You want to be a value, a bargain, a deal, your Costco's, your Walmart's rounding down is going to work better for you.
And if you go that way, it doesn't really matter if you pick a nine, a seven, a five, you can. Pick a number that resonates with you and go with that.
Louis: So I wanted to annoy you with this first question, but you've replied so diplomatically.
Melina: Sorry.
Louis: I wanted to fire you up about it because I know it's part of the book where you ask, you say, like, should my prices end in 5, 7, 9 or 0?
And yes, it depends. And in the grand scheme of things, It doesn't matter, does it?
Melina: Right. Yes. So the truth about pricing, which, you know, I think it comes out on page three of the book is that pricing is not about the price. So everything that happens before the price matters more than the price itself.
And that's the psychology, both of yourself as you're creating those prices and selling them, sometimes saying the price in a confident way. I mean, not even sometimes, often that's where people get hung up, especially in smaller businesses. And so being able to feel confident in the price and say it in the right way and know what matters to the person you're selling to is more important than the number on the tag.
Louis: Okay.
Let me try to, to annoy you. With another one. What do you say to people who say. You know, you should charge more. You should, you should charge what you're worth. Always increase your prices. You know, every six months you need to look at and increase your prices.
Melina: I don't think there's anything wrong with raising prices.
I would say that you don't want to be doing it every six months. If you can avoid it, because that can potentially be annoying your customers. And so being more thoughtful to the timeliness of when you're going to do this and not be constantly saying, now it's more, now it's more, now it's more is, is a better approach and not everyone does need to raise their prices. So on the value side, you know, potentially having a, a big discount or something that's going to showcase. I think Costco does a great job of not like they've said their hot dog combo is always going to be a dollar 50. They're never going to raise the price and their rotisserie chickens are 499.
They're not going to raise the price, but it's not that they don't raise prices elsewhere. So being thoughtful to everything makes a difference. I feel like we're going to have this be a game of like you trying to, to get me and I'm gonna, I'm going to be annoying you by my lack of getting annoyed.
Louis: Yeah.
So far, I'm actually very, very amazed by your composure. I applaud you. And it shows your true professionalism compared to me, where you're like, I would get fired up about anything pretty fast. So well done on that. Now let's go, let's go into a practical step by step. I know very much like your readers, like people listening to this podcast really struggled to set prices. I mean, it's probably the biggest unknown whenever we're launching a new product. Whenever we are like updating a current product, how the fuck do we price it? Do I know if it's enough? Do I know if it's, am I labeling myself? Is it too much? Is he sending the wrong signal?
I mean, it's. Non stop, non stop, non stop questioning. Right? So let's start from the start. Let's say we are not working for a massive brand like Costco because they have entire departments and teams studying the fucking thing and they have data, open data to analyze. Let's say we are, you know, smaller business.
We can be a solopreneur, small agency owner, consultant like yourself, small business owners, like that sell, you know, basic products on whatever. And we want to make sure that we price. That new product that we're going to put in the market correctly. Now, first, maybe let's define correctly, right? What is the correct price?
What is a good price to set for a product?
Melina: So with this, it again, depends, right? And, I wrote a whole book about it to help people do that. But in the case of pricing, as I was telling you kind of before we started recording, people hate it, like you were saying, and, it's scary as especially as a small business owner, whether you have employees or not, when you're putting a price on you in a lot of ways, it can be really, really hard to find the right number.
And a big problem that people face is you are typically not your best client. You're not your customer. You're not who you're selling to. And because you don't need. The thing you're selling, it's hard to value that based on what you would pay for, because you probably wouldn't pay as much as you should be charging for the service that you offer.
So getting out of your own way and knowing what the value is to the person you're selling to, what matters to them is the first, most important step. So how much you should, should charge for something is. It's going to vary and you want to make sure that you're going to make money on it. And it doesn't mean that you have to make, you know, massive margins on absolutely everything on that value side.
You know, you can have small margins and sell a lot and be a very profitable business, but on that like services and whatnot, most people in general should, if you're wondering, can I charge more? Should I charge more? The answer is probably yes. Like you're probably not charging enough just from what I've seen from working with people in small business.
And so then picking a good price is going to be going from there.
Louis: So getting out of the way, first of all, right? So you're not a customer. Can tell you like the number of times I had this conversation with my dad, where he's very curious about my business and he wants to know everything. So I try to tell him as much as I can.
And he would ask me, how much are you going to charge for this? How much are you going to charge for that? And he will almost always almost gasp at the prices, right? Because he's coming from his perspective, which is he's a retired teacher. When I talk about how much I charge, he just can't compute it. Purely because he's not my customer like is so far actually away from being a customer that you just can't comprehend it.
So it's very close to the chest, this topic, right? It's such a emotional thing, which is why so many people hate it. It's almost like we are putting, our like heart out there, right? In a sense, we're like showing our cards, right? Like it's almost for business owners, a personal thing.
It's very personal.
Isn't it?
Melina: Yeah. Oh, definitely. And that's, so even getting back to the root that we're a herding species, right? So we don't want to misstep and throw something out there, one, at being sort of shunned or shamed by the world. And if you put out a number that you are going to test the waters with and nobody buys it, that really comes into your self worth and asking, like, what's wrong with me sort of stuff that we naturally get into, especially again, if it's services and you're a small business, the problem is, if you allow yourself to have that mindset, when you start talking about the price, you are absolutely creating a self fulfilling prophecy that's going to make it that people can sense that something is wrong.
If you're not comfortable saying whatever the price is. So let's say you've raised a price on something and it's 10, 000, right? And you were to say, oh, well, it's a, so it's, it's 10, 000. And I know that's a lot. It may feel like it's difficult, but like, Oh, don't worry. It's, it's this. And if you can't afford it, we could do a payment plan.
Or I used to do it at 7, 500. We could just do that. If you want people do this before anyone even asks for a discount, but obviously people are going to want to ask for a discount if you present it that way. Whereas if you talk about it confidently and say, Oh yeah, it's, it's 10, 000 or just, it's just 10, 000 for this.
What a great value, blah, blah, blah. Like people are more likely to want to buy.
Louis: So that's, that's the difficult thing, right? And it comes from years of experience and stuff. Objection handling when it comes to pricing is an interesting topic. So there's something I've learned, from a sales coach years ago, which it really helped me with prices.
Whenever someone objects to a price, so we question a price or say, you know, something like that. First of all, it's not a lost deal, right? So they are hiding something in the question. There's something going on, right? And so the question to ask then is. What, what would you need to accomplish in order to make this pricing work for you or like to make it valuable for you?
Right? So you don't ask them, how much would it be? How much would you like to pay? You're asking, what would they need to achieve? What would they need to get in return for it to be worth it? And then that's when they start talking about the real objections. Well, they would say, well, I don't really believe it's possible to get value in 90 minutes, or I don't trust you or.
Actually, it's not about you. It's actually about them and their confidence. They don't feel they can do it, et cetera, et cetera. So I might overly simplify it, but I know you talk about that in the book a lot about the value. This is why pricing is not about pricing is, is how much they expect to get out of this, right?
Melina: Definitely. And looking for opportunities to have a higher anchor. Price that you can put out there and it can be on the value, right? So in a case of a sales package, some of the, some people here, you may be selling to a larger corporation or some sort of a company and the lift you're going to give them, you know, even if it's a small margin on millions of units, they're making a lot on it.
And it's not just on your time. And so if you can have the conversation to say, you know, imagine what would it mean to your business, if you were going to make 3 percent more or 5 percent more, 10 percent more on this in the next year, then they have this number in their head that could be in the millions and you're able to say, you know, it's just 10, 000 to do this and we can, we can definitely, even at 3%, you're going to hit that,
immediately. Super easy, right? We've, we've set that high anchor that they're now also invested in trying to make it happen. So those sorts of, of numbers can definitely help even if you don't have a bigger package or something that you're going to sell that's more expensive.
Louis: So maybe let's pick something that is a bit trickier before we go into the step by step.
So I think it's, It's easier to comprehend pricing when we talk about very irrational, cold figures, cold benefits, like more money, saving time, stuff like that. It's easier to put a figure in it. Now let's talk about stuff that have absolutely no rational footing, or at least on the outside, where like we take decisions that seem completely rational, even if we rationalize them.
Let's pick a product or something that just seems completely crazy priced, or not necessarily crazy priced, but has no tangible value from the outset. And, and maybe let's, you know, think about it from that perspective.
Melina: Yeah. I mean, one of the ones that I talk about in the book that I think is a really fascinating example is Supreme and how they will take ordinary items and you partner and put the Supreme logo on it.
The functionality doesn't change at all. And often the Supreme logo is barely visible. I mean, sometimes it's really big, like they did a partnership for, with the Pyrex measuring cups, where the regular one is five bucks, 4. 99 or something. And then they put the Supreme logo on it in the same red print that you have on everything else on the cup.
And it sold for 25, I think, at their retail. And then resellers were getting hundreds of dollars for a measuring cup that has no difference in functionality. And if you weren't looking for the logo, you wouldn't even notice or see it. And then you get into even more, we'll just say ridiculous things that are in there, like a brick, you know, their clay brick that sold and has been on, you know, resale selling still for a few hundred dollars for a brick that has the Supreme logo on it and crowbars and matchsticks and all sorts of things for much more than their functional resale elsewhere.
Louis: So where is the value then? Because there has to be a value of some sort from the person buying it, you know, to get it, right?
Melina: So that Supreme has really tied into identity and knowing what it means for someone to be a part of the brand. And in that, if you know, you know, sort of vibe and because you have collabs, it's not just with Hyrex, right?
So they have partnerships with Louis Vuitton and other big name. Brands that people want to be seen in. They also really leverage scarcity in a smart way with their drops. And because the resale has such kind of a cult following that if you, if you missed out on the thing and you couldn't be there, but you want to show that you're cool, right, that identity aspect again, then you're going to pay for it.
And assume. There's some ability to resell on the backend and get your money back if you ever want or need to, which, which helps them.
Louis: Interesting. Thanks for, for sharing that example. So if we go back to the step by step, the first step you said is getting out of the way, right? We're herding species. We need to be aware of our own cognitive biases.
You mentioned so many in the book, I'm a big fan of always trying to put it back to those core cognitive biases that every human has, because it explains pretty much everything that's going on in the world, right? I mean, I'm sure you. I know you geek out about this stuff way more than I do. So let's say we have a small business.
And so you already, you already break things down in two categories. So you already, you already mentioned, like, is it, are you a quality business or are you a value business? And then you also make in your book, the distinction between service based And product base, right?
Melina: Yeah. And it's less, I actually just had someone reach out to me asking this question and the service versus product, you know, if you're, they were struggling because they felt like they were sort of in the middle of those, that's less right.
I think that is, it's okay to kind of walk that line and you can be offering both. You might have services and products and that's fine, but the value and quality piece is where people feel like they really want to be both. And you are going to think that you're the exception to the rule when I say you have to pick one.
And you're not.
Louis: You're not the exception. You're just like the other girls.
Melina: Right. You have to pick one. And so I have an example in the book from an old client that is a service industry client and we like in marketing, we ask these kind of weird questions, like if this company was a car, what make and model would they be and why, when in this case it was, you know, like an accounting firm or a real estate agent or something.
So it seems strange, but in this case, so did some research with their internal team, some key stakeholders and some key clients and asked that question. And one of their owners had said that they would be a Porsche Cayenne because they're so sleek and high end and all this stuff that goes with being a Porsche Cayenne.
And again, and again, and again, their client said they're a beat up old pickup truck that is dependable. They're always there when you need them. Right? So this is a problem. This is a quality value. Problems. So if you're thinking your quality and you're building that quality products, but then you're putting out these value vibes where you're rounding your prices down and you're doing discounts on things when you shouldn't be, it's confusing for the person who's buying from you.
And that disconnect is something that you want to fix. So in that case, my client had to decide, do they want to really embrace and be on the quality side and change the perception of their clients? Or do they want to embrace the value side? And be the pickup truck that people believe them to be.
Louis: So how do we pick?
Melina: You pick what feels best to you and what aligns with the company of what it is that you want to achieve. So if you are really investing in R& D, you're looking at being very sustainable. If you have certifications that others don't have, if you're looking to cater to celebrities. You go to the quality side of things.
If you're wanting to be running a bunch of sales and do those typically thinner margins and sell typically on volume, then you're going to go more to that value side. And you still can and should offer quality products if you're a value based and you can have a good value if you're a quality business, but the overarching theme of what you're about and how you invest and how you talk about yourself needs to be in one category or the other.
Louis: Okay.
Very interesting. So let's say, let's pick a business right now. It could be a previous business you work with. It could be the client you mentioned and we can go all the way in terms of picking the prices, but I'll give you, the freedom, to pick whatever you want as an example, fictional or real.
Melina: To do, do what?
Louis: Break down the step all the way to launching the product, see if it worked, you know, picking the price and all of that.
Melina: Okay. Don't have a brand necessarily that's in mind to kind of do that with, but let's just say, I guess we could say it's a, do you have a brand you were thinking of or anything that, how you want to approach that?
Louis: I'm happy because I finally broke that, that shell. Let's pick something weird. I know you have a story in your book about this golden octopus in the background.
Melina: Oh, yeah. That's right there.
Louis: So let's have a business where we breed octopuses, real ones, and we sell them to zoos and aquariums, private customers worldwide.
Melina: Okay. I would like to assume we're a quality octopus breeder so in this way, and I guess for all of the flack that might be coming of, if we misspeak we have free range octopus, like they have wonderful lives. Octopus is my favorite animal. So they're well, they're well maintained.
Louis: So let's, let's go straight away.
Like the reason why I want to pick an example is because it makes us work through the questions and actually talk through the two options. So you naturally went to, okay, well then it's quality, right? Because the general vibe of the business is about obviously selling. Well fed, healthy mollusk, right?
That's people we like to see that are actually extremely smart animals, right? They are extremely, extremely smart. They can get out of the craziest situations. Right. They are fucking amazing. So it's clearly value, right? Which means we probably sell to folks who have money, either private, maybe, customers who have big aquariums in their house, even though I'm sure you'll say that you can't actually have octopuses in small contain because they're so smart, but so maybe the maybe zoos and whatever. But yeah it's not everyone can do this and therefore it's valuable, it's higher margin, it's quality takes time. So that's kind of the thought process behind it.
Melina: Right. So that would be on the quality side. And again, we'll assume that there's lovely lives and this is a great business, right.
And nothing, yeah, in there. So in that case, you know, we want to make sure that we have well maintained octopus breeding as we're, we're growing our cephalopods and we're getting them ready to go. And I think there would be a vetting process for our customers to make sure that they have high quality standard for the octopus that they're going to be bringing in. And we can go ahead and say, we'll assume that there is a version. Maybe we have a special octopus that can be in, in large aquariums in homes. So not like a small little fish tank or something, but people that build out these big aquariums. So...
Louis: And you can take them out and play with them.
And then put them back and they're happy.
Melina: I love, there are so, there are so many stories of where the octopus, you know, is getting out of the tank at the zoo and was going into another tank and eating the shellfish and then would come back before anybody came back overnight and stuff, really interesting.
So yeah, we've got this great octopus in that way. And probably we would want to get into the process of selling the tanks as well. And we would look at the maintenance. of them and making sure that you're having the highest quality octopus food and you have maybe a, you know, octopus exercise program or something that you're going to be having for them.
Louis: So why do you have a package?
Why do you think of that straight away? What, what goes into your mind when you. We talked, I talked about selling them and you naturally go to maintenance, food tank. Why are you doing this?
Melina: Because the customer in this case needs all these other aspects for one. And so we should be making money on those things.
And also, you know, you sell the octopus one time and they're going to keep it for a long time. So we want to be having ongoing business with our customers. I think it also helps to embrace the quality of what it is that we provide, that we care about the animal. And it's not just, you know, the business, right.
That it is about this maintenance of this beautiful creature and how it can be, you know, a value add to the, to the zoo, to the high end home.
Louis: So what question, what's the number one question? That folks could ask themselves in order to find those opportunities, those extra things, or those things outside of the very, very core product that we offer.
Melina: So this is a process of stepping back and imagining what all goes in the experience along with the key item that you are going to be selling. So you don't have to be, you don't have to fill every aspect there. Some points you might have a partner that you work with or, or something, but as you look at and think about owning an octopus, there are a lot of things that people don't necessarily have and potentially don't know or understand.
And someone who can afford to buy an octopus and its massive tank, one, they don't care about price definitely, right? They want to have a cool thing in their house that they get to show off. They're not cleaning the tank. They're not like getting in there and like feeding the octopus. So they're going to want to invest in making sure that it stays clean and healthy and maintain the pH level.
Like, they're not testing that, right? So they're going to need help. And if they have to go to someone, they're going to be most likely to trust you as the one who is selling that animal. And if you have really high standards to say, not everyone gets to have one, you can't just buy this from us, then you are also proving that you've kind of earned it.
So just thinking about the overarching of what they're going to need to do it really well, and know that you could price that. And I, you know, knowing there's like no, I have no idea what the price point would be for.
Louis: Which is great. Which is perfect because we'll figure it out together. Okay. So you mentioned the P word, you mentioned package already, right?
So what do we mean here? Maybe let's define it briefly. What do you mean by package?
Melina: So, you know, in the case of the octopus, the package is that you don't just sell the one off item, but this is the, the maintenance, the setup, the ongoing. things. It doesn't always have to be ongoing like that. Like, we do projects at the Brainy Business and might say, you know, for three months, we're gonna do this.
And it's not just that we'll answer the question about your pricing, because that's not enough. For you to do it right, you need to make sure you're including the behavioral science in the way that you're implementing your scripts. You need to have it in the way that you look at, the chart, you need to also think about how you're going to communicate it to your team.
These are things that matter and we're not just going to be willy nilly throwing out prices, just like we wouldn't be handing over an octopus with no tank, right? It makes no sense. So if you think about how you offer and what should go together, you can then. create a package or a bundle of some kind.

Louis: So is that the next step? So now, now that like, again, just to repeat briefly, once we know we've picked value, value business, once we looked at the
type of things.
Melina: That's a quality, that's a quality business.
Louis: Sorry,
excuse me. Yes, of course. Quality.
Melina: No discount octopus here.
Louis: No, no, no, no cheap, no cheap species that die after five days. Then you naturally went to the type of people who naturally kind of buy from that, and you assumed a few things about them, such as the fact that they probably wouldn't feed that thing themselves. They wouldn't do a bunch of stuff, and they are probably more buying it for status, right? Or more like for a story for their friends and for feeling like they are the first one to get one feeling like it's not everyone who can do this.
So it's like, come to see me, look at me, how cool I am, right? To generalize. So that's kind of what we're going after as the, as the value, right? So now what's the next step? So we know roughly. What we want to offer. We know roughly to whom we want to offer that. Let's stick by the way, just to keep it simple to the wealthy individuals with, we have, you know, the money for have massive tanks in their own house, just for the sake of it.
What do we do next?
Melina: So we need to be looking at the market, right? We want to be looking a bit at what some competition is. So maybe they can get an octopus somewhere else, but also maybe there are other, animals or things that people are going to be buying that we want to keep in mind. That's part of how I got into the making it easy to buy, and take care of the octopus, right?
So we want it for the show, but I don't want to have to deal with it necessarily and making sure it stays alive. And so, whereas if I'm buying a, some other animal I've heard, you know, we've heard of. Who what? Mike Tyson had a tiger or something crazy.
Louis: Yeah, allegedly. Yeah. And Pablo Escobar had uh, had uh, hippos, right?
And they reproduced so much in Colombia that they had to actually fucking killed, kill a lot of them. Because it became invasive species, because they're not native from there. Yeah. That's a cool story. It's true. So, so let me just cut you here. Because that's so important. So you mentioned competitors.
So we are looking at, first of all, we're probably looking at direct competitors. So competitors who offer the exact same thing, they would sell. octopus to this type of client. Then we're looking at indirect competitors. So maybe they sell other animals, but then there is this entire other world that is the alternative that could be, basically, we are competing against a new painting.
We are competing against.
Melina: Handbags.
Louis: Yeah, exactly. Things to show off. To your friends, cars, cars, stuff like that. So that helps a lot. I suspect for, to start looking at prices, range, price ranges and stuff. So just to, if I was to Google this right now, which I will, but what do you look into when it comes to direct competitors, alternatives, like what, what is the information that you care about at this stage?
Melina: I would care, like you said, you want to see, so we would need to know a little bit about the, what the overall investment is like for the octopus because in, in the case of a bag or something, or some of the other things people might be investing in a boat or whatever, you know, they have similar, some of them have ongoing expenses for maintenance and some of them don't storage or whatnot.
And so you want to be thinking about what this. If we're talking about a, an initial investment of 500, 000 or, and an ongoing, you know, 250, 000 a year, or is it 5 million, you know, what does it tie into based on other aspects to be able to make the comparison? Also would want to be looking at how and where we might encourage that they could be sharing and talking about, I guess we'll say bragging.
But like social media is probably a place where people are going to showcase what they do and, and have. And so if they're going to be talking about their octopus on Tik Tok or, or whatnot, you know, how often can it be in the background? Do they get to help have their followers name? Their octopus, do they have other things that are helping to let this be ongoing type of content that shows their status and we can be, you know, encouraging some of that and there's value there that maybe they don't have just with, you know, stepping in the car one more time.
Louis: So, what do we do next? I'm starting to Google and it's actually quite difficult to find.
Melina: Yeah, I don't think that
there's a
Louis: They do actually. Some of them do, like baby octopus for 125, which is disgusting. Online, great reviews. Let me see. Octopus farm. I just want to have an idea what's going on here.
Melina: I feel like that's getting into octopuses food.
Versus pet, if we're getting into a farm.
Louis: Okay. Anyway, let's go back on track. Let's assume that it's doable and all of that. So we have like.
Melina: Yeah, like we said, we're assuming this is all like great life for our octopus. Yeah.
Louis: So we want, right. We're working together. We want to have an idea of a price because we have some potential buyers, right?
Let's say we have friends of friends, people starting to look into this, starting to be trendy in their circles about like showing how smart and whatever those animals are. We need a price. We need like an idea for this package. So how do we decide? What do we do next?
Melina: We get to the, so the numbers come up toward the end of part two, it's the last chapter in that section.
And so we need to know some baseline of the, you know, the costs to us, and the value to the person on the other side. In something like this, like we say, where this is a luxury item, individual, whatever, right? The package being an item of all the things that you need. No one needs this. You don't. So it's not about price, especially in this case.
And so if you have it priced too low, like they're probably so often they're not going to, like they say, if you have to ask the price, you can't afford it sort of a deal. Right? So if we look at the, I would probably look at the costs that are going into the maintenance package the building the tank, maintaining the experience, it's food, all of those.
And then knowing the, like what it's cost us to maintain our octopus, our octopi. Do we even say octopi anymore? I think they changed it to octopuses now, but to be able to have them be in this high quality, aspect You know, like I said, it's potentially that it's I think we would be looking at also other investments that are made around the home for these luxury houses and like, let's just, we would take those numbers to get to a baseline to make sure we're going to charge enough and then to know said, I mean, we could say it's.
500, 000 or 400, 000, it doesn't.
Louis: Yeah.
So like that's easy enough, I would say, right? For people, I, and I feel like this is the number one method where they look at how much it costs them and then they add a margin to it. Right. Which is never a good idea, but, actually it could be for, if you're a value business and it's tighter margin, whatever.
But for us, we are quality business. So we know roughly, let's say that the cost to us is 400K initially. And then the ongoing maintenance would be like 50K a year of foods that they will need of like the filtration system.
Melina: Maintaining the tanks and everything for that. Yeah.
Louis: Just to have an idea. So we know that we are not like Costco where we can sell stuff at loss.
We know we need to make money off of that. Okay. Now the value to them, how do we quantify that?
Melina: So again, I think in this case, it's looking at the thing with this demographic is they likely know what it, those status things mean, and you want them to love the idea of this differentiation and being the first one.
And so there's some scarcity aspect in there of, one that there aren't very many, but also loss aversion and FOMO of, and wanting to be the first one to be able to showcase that you have this thing that no one or very few people have. And so, you know, if they, if we already know. The types of return that they get on social sharing and whatnot, they probably already know what those values are.
And just even to show off to their friends when they come over and at a party and like, why have a, why have to deal with a dog that you have to go take for a walk? You know, your octopus is going to be taken care of and it's such a cool creature, you can see how they dance in the water or, you know, whatever.
So using some good in the, my, it's not about the cookie framework talks about several concepts, one of them being priming and using really thoughtful words that are going to layer in, you know, adjectives that help to feel luxurious in this case, right? And so making sure that we are. We know which at least three words really tie in with our own brand, which is something that each brand has to come up with on their own, but then also thinking about getting them to imagine the experience and think about just imagine showing having your friends show up and see what a cool thing that you have here that they like.
Only, you only see at a zoo and you also get to have, maybe the kids get to watch it. Like, yeah, there's a regular fish tank, but you're, you know, you don't need that. Right. So I think it, the octopus sells itself in that way.
Louis: So you mentioned three words. So tell me a moment, what do you mean by three words, for their own brand?
Melina: For priming? So if you're picking your priming words, so the thing we know from behavioral science is one of many, but in the case of priming is something that happens just before a decision point is impactful on the choice that someone is going to make the words that you use images that you use.
And so you want to be really thoughtful about those to make sure that they're lined up with that experience you want someone to have. So in the book, I have two pages that show words and you can pick which ones you want to align with your company. And, you know, if you like for me, thoughtful, is one.
And how do I emulate that throughout the business that, we're thoughtful. In the case of the octopus lifestyle, right? It can be, opulent maybe is the, a word that you like, and that if you are just going to pick three key words that show up in the communication that you, when your team is talking about it, as you, what is the, what does opulence look like?
What's the imagery of that? How do you talk about this being an investment in yourself, and whatnot, and this level of luxury that no one else really has, that language doesn't work for every brand, right? So for the value ones, they would pick something else.
Louis: What I would naturally go to would be, we talked about this, those alternative, right?
I would naturally go to like luxurious, scouse things that not everyone can get in, that costs a lot of money, that feels extremely exclusive. And I would try to look at the language they use. So like, what goes into my mind straight away is the only seven star hotel in the world in Dubai, the Burj Al Arab, and I would look at, I would look at the words they use and even the imagery of it.
So I'm on their website now and it's like black and white, the font would be you know the serif fonts, very like feels luxurious and the words they use would be like indulgent daily breakfast, butler service and Hermès amenities, the way they name their product, meaning like their rooms, the refined luxury with spectacular sea views, the deluxe marina suite.
So I would look into that and try to get into their worlds a bit in terms of what is expected of the type of, you know, luxury we're talking about and maybe look at commonalities and things that we could, you know, use as a way to project our own signals.
Melina: Yeah, definitely. And knowing, the people, that stay there, that actually stay there are ones that would be able to afford what it is that we're selling.
So we may even look at, you know, taking a step and looking at Supreme, right? Maybe we want to do a collaboration with that hotel and they're going to have a really amazing tank. That is in the lobby or somewhere that has. It's one of our best octopuses in it and helps their clients to see how amazing the octopus is and then being able to say, you know, you can actually like are the people we partnered with that you can have your own octopus in your own home.
They do home tanks, but only for very special people like, like you.
Louis: So I'm trying to get an idea of the price now. I'm trying to see like supercars and stuff that like that people we used to show off would be what, 500 grand, a million, sometimes even more. Paintings is a way to launder money, a lot of people, but you know, it could go for millions as well.
A hundred thousand. So I don't know. I'm naturally kind of going after like thinking about price ranges that are like in at least a million to start with as a. You know, as the, and the anchor in my head is that is those like extremely expensive, luxury things that you spend money on not every day, even if you're super rich.
Melina: Yeah. And, in the, like I said, in the beginning, in the truth about pricing, it doesn't really, the number is, is not as important, especially on this side. But yeah, let's say it's, it's a million, right? And the thing is for the person who's buying this, it being more expensive makes them want this thing more than in other cases.
There's also, you know, even research into things like pain medication that when people were told that, the pill itself was only 10 cents each versus 2 and 50 cents each, they felt. They said that the one helped lessen their pain more than the other. And they're getting like mild electric shocks at the time and they're both sugar pills, right?
So when we think something is more expensive, we think it's going to work better, it's going to do what, what you say it do, it does. And so the investment in it, if it is more expensive like that, it's less. And you say it in a confident way. It is just what it is. That's just how much it is.
And like, well, you know, you want it or you don't, but we only have two of them this year and there's a waiting list. So if you want it.
Louis: A lot of people struggle with the, this kind of commodity pricing, this kind of feeling, like really being pulled closer to the competitor in terms of pricing and, and whatnot.
There's a few quotes that I've seen over the years that I like about it. But there's one from, I think it's Seth Godin who said, low price is the last refuge of a marketer who has run out of generous ideas. To go back to your idea about your premium thing, this is something that is very apparent in service based consulting, coaching business, where the higher the price, the more people would do themselves a disservice by not applying what they are going, what they've paid for. So it's, I've seen it in my own practice so much. When you increase the price, it's actually a generous act for your customers because it means that they're going to take it way more seriously than if you had to pay, you know, like a hundred dollars for like six hour session. Have you seen that in yours?
Melina: Absolutely. Yeah. And from my own clients and things as well in the work that they do, that people feel more invested when they invested more and they're more likely to do the work and believe in it, which means makes it more likely that it's going to work. And it's a really virtuous cycle for you there.
And so we all know that the free people that you offer a discount to like a friend or family member that you say, Oh, I'll just, you do it at a real big discount or give them something for free or, we won't say always, but tend to be the worst clients we have. Right. Yeah.
Louis: Yeah. So I, I finally, the page has loaded.
So for the seven star hotel, the most expensive suite, the diplomatic three bedroom suite is available at a starting at 7, 975 Euro per night.
Melina: Oh, that's a deal.
Louis: Yes. Multiply that by, let's say, if you stay 30 days there, 240 grand. Like I feel good about, I know I come back to the number, but I know that.
When people think of pricing, that's what they visualize a lot. It's like the, but what is the amount? So maybe we can go to like the next step in my opinion, which is about testing and seeing, what works or what doesn't. Right. There's a lot there about the way you frame things. So you mentioned an anchor before you mentioned in the book, you mentioned, having a more expensive product next to, next to the one you three want to sell.
So this is what this one is quite well known, but is there any other, principles, perhaps less, less known about the way the price is presented, that makes it easier for customers to buy and feels more valuable.
Melina: Well, so while you mentioned framing and conceptually, we get what framing is and what it means, but I think people really underestimate the value of how you say something and how much of a difference it has on whether people end up buying or taking an action in something, right?
So saying the same exact thing in two different ways can have a huge impact on whether someone likes it or not. You know, I give the example of if you had to go to the store to buy some hamburger and there are two stacks, they're almost identical. One is labeled as 90 percent fat free. The other is 10 percent fat.
Overwhelmingly, people want the 90 percent fat free version, like it feels very different. It's exactly the same, but it feels completely different to us. So if you're talking about your product, your service in these 10 percent fat terms and don't realize it, it can make it so the best thing people aren't wanting to buy.
This would be, be a reason, a route where often if you have, you know, salespeople, they're selling exactly the same thing, and one never has an issue, and everybody wants to buy in, and in the other case, they're constantly having problem. It's very likely it's the way they're talking about it. I think another one that people don't understand how important it is is social proof and being able to see how others like us or those who we want to be like if they've already bought and they're interested.
We've talked a little bit about this already in, you know, celebrities on social media, but that's not the only type of social proof, we have, you know, wisdom of our friends, we have authority. There are seven categories in that of different aspects of social proof that come into play. And so knowing which ones make sense for you and being able to showcase for that herding species, again, that other people do this is, is really valuable when it comes to someone buying in and loving that idea from the beginning.
Louis: So seven type of social proof. So customers, experts, celebrities, influencers, the wisdom of the crowd. So the masses, friends, personal connections, certifications, and media.
Melina: Thank you for, I was realizing that as I went ahead and allowed myself to say seven, say, I know I'm going to be on the spot and I'll forget one.
So thank you for reading it from,
Louis: From this nice book I've read recently, I recommend it. But it's might sound, like an obvious thing, but I think this is why so many people are getting tripped up about pricing and marketing in general is that they assume that people are, people are rational.
First, they assume that they are rational, that they take decision willingly, the stat in your book that I wanted to mention briefly, which I didn't know, which is fucking crazy, is that humans take an average of 35, 000 decisions every single day So of course, we're not all taking them like rationally putting a spreadsheet together, for every one of them or whatever.
So we are not rational. I'm not rational. Neither, neither is anyone else. So then once you know that, you know, that your customers are not and yes, the way you frame things, the way you present things the way you put things around other stuff, has an impact, has a massive impact. So it's not just the thing, it's everything else, apart from framing, social proof, any other ways to kind of frame prices, your prices, the right way so that customers buy.
Melina: So in the part three of the book, I have my it's not about the cookie framework, which has six aspects to it. We have framing, priming, loss, aversion, scarcity, social proof, and hurting and reciprocity. So we've already really covered the first five. And so reciprocity being that when we give a little gift of some kind, people feel inclined to give back, you don't have to be giving away things for free or doing discounts for that.
There are gifts of knowledge, gifts of little, like, maybe you're going to be sharing something. Yes. We share the gift of knowledge, right? And these sorts of, but there, you don't have to just be discounting. So it can be a bonus, or something, or even being able to be associated with that status would be being in the know, like, so with Supreme being in the know, giving the newsletter of knowing when the drops are going to happen and what's coming and having a little bit of early knowledge is something that they might be giving as a gift to a select group that doesn't have to really cost them anything and actually serves them very well, because then those people go.
Maybe they leak when something's gonna happen because they get the status for it. Right. There's a real circle to all those. Yeah.
Louis: So framing, social proof, reciprocity, loss aversion.
Melina: Priming.
Louis: Priming. Oh yeah.
Melina: Did that one Did get us to six. Did that, no. So framing. Priming the herding and social proof.
Scarcity. Oh, scarcity. Got it. Yeah. Loss aversion and reciprocity. Are those. Those six in that framework, the next section, the next chapter of the book is looking at the choice that you and, and really how you architect the choice, that moment and how you present the options is really, really critical that gets into the anchoring, like we've talked about, and also relativity.
That how we put things against each other and how that impacts the choice. Example of this from a friend of mine, Brian Ahern is, you know, imagine you go to a store to buy a couch. You get there and you see one you like, you ask how much it is. And they, the sales associate says, Oh, it's 900. Oh, my mistake.
700. So that's scenario one. The other case you go same couch, same person. How much is this? And they say, Oh, it's 500. Oh, my mistake. It's 700. The couch was never 900 or 500, and yet in one case it feels like a really great deal, something we're excited about, and the other one it feels bad and we want to go find cheaper couches.
And so knowing that the way you use numbers, the way they can be placed and other things that's not just numbers, but the way that you showcase something around that best offer and the choice. So you sort of mentioned in the book, I talk about creating your best offer of a product or service of what you really think is the best thing for people to buy.
And then for most businesses, we want to then create a wingman. Right. The thing that is, we'd be delighted if people end up buying whatever this thing is, but its job is not to be purchased. Its job is to help that best offer look good. Often that's your high anchor, but it doesn't have to be. And it helps that experience be easier to buy.
Louis: So the last, there's another one actually you mentioned throughout this part, which is the curiosity. Which is when used properly, so powerful. In fact, I use it for pretty much every title of my podcast, every subject line of my newsletter, pretty much everything, like the curiosity bias, trying not to sound like a cheap tabloids, newspaper, but genuinely just, tell them there is more on the, for them to learn that they need to go and listen to the episode on the podcast. So maybe one of the, maybe my last question when it comes to like this, this step by step is squeezing that I've been, doing on you, uh, challenge you as much as I could. What is your number one tip to use curiosity, the curiosity bias in pricing?
Melina: So I think it's, it comes into the aspect of what happens again, before you get to, the number itself, you want the person to be enticed and interested enough to be ready to buy before they even get to the price. And that's where that curiosity is.
It's partially it's framing. It's also some of that priming in the way that you use the, the language to be drawing them in, in the cookie framework, I talk about it as the scent of the cookies, right? The thing that's getting you excited and gets your brain focused on whatever the item is and making you again, buying in before it's even time to buy.
So I would say thinking about in the upfront. Experience what makes somebody want to click, what makes them want to take that next step and keep moving down the path using and leveraging the curiosity bias is going to be helpful to make them keep going. And every time someone clicks, every time they open your emails, even if they're not buying something, they're, you know, self hurting as the type of person that likes to see what you offer that, that is engaged with you.
And they're having kind of little mini buying moments, buying in on, on your ideas. So, yeah, being, don't just say, you know, you need to be using reciprocity, are you? Right? That's not really.
Louis: That's the shitiest subject line I've ever heard.
Melina: So we don't want something like that, but what would be the way that we can be curious, creating that curiosity of this one thing that did this and like, click to learn more without it feeling like clickbait, right?
There's a real balance, like you said, to, to framing that in the, in the right way. And that's, you know, A B testing and things. You can just be doing lots of little tests all the time to see what's going to resonate with your audience, which I think is where a lot of the fun is.
Louis: Is there one thing that you love to talk about when it comes to this topic?
I mean, you wrote the book on it, so you don't spend hours and hours on it that I haven't asked you that you'd like to mention.
Melina: I think the big thing is to know that when it comes to pricing, you need to, like we said, get out of your own way and you really can charge whatever you want for anything. And don't feel like just because your industry has always done something a certain way, or people have always bought from you in a certain way, all the limits and the rules that you've put on yourself and your organization and the industry are, typically self imposed and you, if you take the time to step back, be thoughtful about it and say, what if it wasn't that way? How might we do this in a way where, what if people really wanted to buy this way? So there isn't, people have always bought on, on demand or whatever for this particular item. What might a membership even look like?
How would we do that? Or if the price, everybody's competing on price. What if we didn't do it that way? What would the luxury market for this look like? Getting out of your own way? is really the most important step, which is why it's got the bulk of the book, but really has a whole chapter that's called you to help you make sure that you're primed and ready to expand your horizon.
Louis: So Melina, you've been an absolute pleasure. Thank you for playing the game of selling molluscs to wealthy individuals. Just briefly, before I ask you one last question, I'm just going to summarize what I've learned from you today. I mean, the main things, because there's so much. So first, yeah, get out of, get out of your own way.
Pricing is never about pricing. We are herding species. Take the decision between, are you going to be a quality business or value business? Use anchoring. It's about higher value than, than the price. You also naturally talked about. package and packaging about, you know, it's not just about the mollusk that you're selling.
It's also about everything else that needs to happen for this product, in a sense to, to be bought. We talked about the market, looking at direct competitors, alternatives. We talked about the cost to us versus the value to them. And then all of the different cognitive biases, the main ones that we mentioned is like framing, priming, social proof, reciprocity, loss aversion, scarcity, and curiosity.
And the last thing you mentioned, which I think is a good way to. Also, and this episode is what if it wasn't done this way, right? What if we could do this differently, which is probably one of the most important questions to ask yourself, not just in pricing, but in life in general as well. So, Melina, what are the top three resources you'd recommend listeners today?
Besides your book, the truth about pricing, the other two books as well, that you can mention if you want, but I love to know. What you'd recommend.
Melina: Sure. Well, when you were talking about the asking better questions, I always, one of my very favorite books is called a more beautiful question by Warren Burger.
It's one that I do always recommend for people. As you think about asking better questions that can help you to be innovative and open up. That's a really good one. We talked a little bit about, like you said, the three books and knowing that these are podcasters, though, the brainy business podcast does have a lot of different insights.
I have full episodes on framing and priming and reciprocity interviews with interesting people doing cool things. And I would say that for anyone who is interested in behavioral economics, as you know, maybe it's your first exposure to it. Or maybe you've been trying to kind of figure it out. You can go to behavioral economics. com, is a really good resource. They do have a blog, but they also talk about different educational programs that are available, research that's done kind of a different way. dictionary or encyclopedia of different terms and academic citations and things. That is a good place to go look as well. Another resource.
Louis: Melina, once again, you've been a pleasure. So professional, so well prepared, impossible to shake.
Melina: I know. Sorry.
Louis: Foundations.
Yes. Thanks.