Online Marketing Secret Number Fourteen:
We all put more value on what we believe to be scarce.
When the scarce item is a commodity, its price goes up – and we will pay it. The basic economic philosophy is that when supply is low, demand goes up. And when demand goes up, you as the merchant can charge whatever price the market will bear.
Even better, the supply crisis can be completely an invention of your own, and it won’t matter. As long as the crisis you create is real, you can still charge as much as you like, within the limits of what the prospective clients in your market will pay.
You’ve seen fire sales or limited time offers all over the Net, and maybe you’ve had an interest in one. The page says that the price will change at midnight, but you think that it’s a gimmick. You go back to the page at lunch time the next day… and the price really has gone up!
Do you write to the merchant, upset that they kept their word? No. You make a sport of kicking yourself in the rear for needlessly spending $197 for an item you could have paid $147 for yesterday, as you fill out the order form and fork over the money, not wanting to risk that you’ll forget again.
This is an example of created scarcity.
The merchant you want to buy from realizes that they have a great product that people need, but that it may not be as great use to their clients if everyone has one, or because they can only provide support for 200 people, and so on. So they can either set a flat price and deal with those problems later, and risk not serving their market to the best of their ability.
Or they can make ethical use of the concept of scarcity and limit the number of items that they release to the market.
You will eventually find yourself in a situation where you have a great solution to a problem, but one that will diminish if too many people are able to use it.
This is one situation where a limited quantity or timed price increase would make sense. There’s only one issue.
No matter what the reason is for increasing the price, be sure and actually make the increase when you hit the number you want.
This is different from when you’d guarantee that a product will be at the same price until midnight, and then deciding to leave it the same, or until you sell a certain quantity and you haven’t hit the number yet.
If you don’t change the price, fewer people will believe you’re serious the next time and your sales can slow down as a result.