

If You Want to Raise Prices, Tell a Better Story - nvk
http://blogs.hbr.org/cs/2013/07/want_to_raise_prices_tell_a_be.html

======
MattRogish
Isn't this just The J. Peterman story re-told?
[http://37signals.com/svn/posts/1677-j-peterman-selling-
stori...](http://37signals.com/svn/posts/1677-j-peterman-selling-stories-not-
just-products)

Yes, putting nice, long-form copy around regular objects will get them to sell
better. I'm pretty sure this phenomenon has been around for a long, long time.

The big thing is a) you can't lie (like some of those stories do) and b)
coming up with a consistent voice and narrative is actually quite difficult.

(Disclaimer: I used to be the CTO of J. Peterman)

~~~
gphil
_coming up with a consistent voice and narrative is actually quite difficult._

Yep, especially so for a startup who is still figuring out their place in the
world. This is something that we constantly struggle with, and there's no
solution other than putting in the effort to keep rebuilding your narrative as
your audience changes.

------
mistercow
First off, there's no control in this experiment. You'd need to find out how
much they sell for on ebay _without_ the story. Otherwise, the entire factor
of 27 could simply be from listing it on ebay.

Second, it's iffy whether this advice generalizes to other types of products.
It's obvious when it comes to art and antiques. It's less obvious when it
comes to technology products.

But to some extent, while this article doesn't provide good evidence, the
"story" concept can arguably be applied to many other consumer products. Most
consumer products are purchased at least in part for status, regardless of the
buyer's conscious intent.

For example: A tech savvy person buying a laptop may actually need the laptop,
but anything they buy over the bare necessities is likely driven largely by
the perceived status boost obtained thereby, not by the extra convenience
those features will afford. The reason it feels good to imagine having lots of
computing power at your finger tips is not that you are conceiving of that
convenience, but that your status-increasing hardware is perceiving that in
that fantasy, you have higher status than you do now. You are imagining being
the kind of fancy schmancy person who has a computer with that much power.
Whether you realize that consciously is irrelevant.

The telltale sign of this is that after purchasing the laptop, the thrill of
those features dies off rapidly. That's not just that you're getting used to
the convenience; that would take longer. Rather, your status seeking instinct
has assimilated the high speed computer into "status quo" and has turned its
avarice to other status symbols.

So in that sense, "stories" attached to consumer products can increase their
value. There's a reason that Steve Jobs liked to mention that the Titanium
PowerBook was made of the same alloy used in space shuttles, for example.

What I wonder is whether businesses are as susceptible to that kind of
pressure. My gut tells me "no", but perhaps the people making the buying
decisions will still want to bring high status talismans back to their
"tribe".

~~~
solistice
No, stories like that are used in B2B marketing. Sometimes you take a very
well perfoming testimonial, and craft it into a story and blast your list with
it. Instant sales boost, and the degradation of your list is minimal,
especially if you can pound in some kind of novel insight as well.

~~~
mistercow
So if you want to help your business succeed, some great low-hanging fruit
would be to teach your employees how to counteract status biases when making
decisions.

~~~
solistice
Some even better low hanging fruit would be to teach it to yourself first,
because I doubt you can. Great marketing is incredibly seductive, and it
invokes psychological principles which you simply can't get rid of. So your
only path out would be to resign yourself from ever buying anything, and
retreating to a heremit lifestyle. Not a feasible option in my opinion.

Let me tell you a story. About a year ago, I started getting into online
marketing in preparation of starting a business. Fair game, right? Split
testing, Keywords, the whole google-fu. But the most important aspect of
online marketing isn't ninja-SEO, or conversion secrets out of Japanese dojos.
It's copywriting. And copywriting is like all other writing. You improve by
practice, and you improve by studying the masters. So I set out to find some
masterfully crafted ad copy.

Now through my previous study, I stumbled over the ads of John Carlton. One of
them, "Testosterone" caught my attention. It was one of his best converting,
it was older, and I was incredibly far removed from his target market. After
all, he was trying to sell body building supplements, and if there's a thing I
don't do, then it's bodybuilding. I mean look at me, I'm skinny as a twig. I
look at gyms from the outside, and that's that. So I thought, perfect, I'll
start with that one.

So I started chewing my way through this 5 page ad, this machine gun feed of
bullet points. I was trying to reverse engineer what he did. I get exited by
it. This is good. I like this. I...I want to buy it? What the hell? That
moment, I knew Carlton had me. I'm wary of ads. I toss most of them without
reading further than 3 lines, the words BS written all over my face. But
there, he got me.

So you think you're dealing with low hanging fruit there?

~~~
mistercow
Eradicating status bias effects is almost certainly not possible. But there
are effective and simple techniques for reducing your susceptibility to them.

Minimizing the amount of marketing literature you expose yourself to is a good
start. In fact, that's a good way to reduce your exposure to many of the
weapons in marketers' vast arsenal. Exposure to marketing materials should be
limited only to what is necessary to evaluate what objective benefits are
offered with a product or service, and what it costs.

One technique is to read those minimum necessary materials, take notes on the
actual objective costs and benefits, omitting all marketing buzz, and then
walk away from it until any excitement from what you read fades. Later, you
can review those notes with a clearer head. Or better yet, hand them off to
someone else to evaluate, who hasn't been exposed to the propaganda.

It's also a good idea to read Robert Cialdini's _Influence_ , and then reread
it periodically. It's an excellent (but far from complete) run-through of some
of the most common tools used by marketers, and techniques for resisting them.

~~~
GFischer
One problem with minimizing exposure to marketing materials is that it lowers
your resistance to them :)

I don't have TV, and when I go to somewhere that does have, it's very easy for
me to become mesmerized.

------
kjhughes
Wrapping unwanted objects in fabricated stories, however colorful, is not an
ideal way to use stories to raise prices or facilitate sales. It's also hardly
helpful for startups looking to build products people want (as opposed to
peddle junk nobody would normally want).

Let me suggest a more inspirational example of leveraging stories in sales:

[http://thisisstory.com/](http://thisisstory.com/)

And the founder's TEDx talk:

[http://www.youtube.com/watch?v=fbnWY-
swsK0](http://www.youtube.com/watch?v=fbnWY-swsK0)

This company uses stories to sell without relying on outlandish fiction. They
have interesting blends of off- and on- line operations, merchandising and
branding angles, and opportunities to introduce products for companies or
conduct marketing research for potential new products.

~~~
bksenior
Sorry for being crass, but this is naive. Your ability to process between the
value of a product and the perceived value of a story is blurred at best and
zero at worst.

------
mgaphysics
This makes sense when there is, in fact, a story to tell. Depending on the
item, I think that the story can be simplified by concentrating on the
BENEFITS of the item. For example this is the description of a watch for sale
in a daily deal I just received on email:

Lancaster XXXX Quartz movement Case diameter: 43mm Mineral crystal protects
watch Stainless-steel case; black dial Water-resistant to 165 feet (50 M)

Rewrite, with story:

When you hit the street, do it with style and confidence. The Lancaster XXXX
features a big face, steel case (unapologetic rhyme there), and a quartz
movement that is more reliable than your cell phone service! Oh yeah, and if
that unassuming pothole is deeper than you thought, this watch will survive a
dip in the water.

So you get the general idea, there is a story in the benefits. After all, how
many people buying a $10 watch really care or know what a quartz movement or
mineral crystal are?

~~~
Dylan16807
>a quartz movement that is more reliable than your cell phone service

Is this talking about being able to make a call, or the time reported by a
phone? The former is a non-sequitur and the latter is a lie. This would not
make me very impressed with the seller.

~~~
mgaphysics
I would bet my ten dollar watch that you are a developer and not a marketer. I
suppose that you might point out that geckos can't really talk, and Flo will
not answer your questions about car insurance :)

------
dotBen
This story is interesting when the increased price is within the wallet size
of the addressable market. A good example of that is coffee - I can buy a $1
cup of crap or I can buy a $6 venti-bs-caramel-late from Starbucks.

Wow, you've convinced me to make a 6x price purchase based on narrative, but
in real terms its still six bucks and I have the money in my pocket.

What seems to be missing is that you can't increase the price point of your
product via better narrative without also considering what the market is
able/willing to pay for it.

With WP Engine we took the concept of commodity hosting (~$10-$15/m) and
decided we wanted to offer a non-comoditized product with amazing narrative
for $49/m. We ultimately changed that to $29/m _(which is still 2-3x)_ because
the size of the addressable market prepared to pay $59/m for that size account
was slim. We make more money from selling at $29/m than we would at $59/m, and
have a much healthier GPM than $10/m hosting.

(I ask the same of the $20 toaster and the $400 toaster in the OP's example.)

To suggest that we could keep on raising prices based on better and better
narrative would be false.

------
tomkarlo
There's an argument that a lot of branding is simply an attempt to "de-
commoditize" a product and thereby justify a far higher margin due to its
perceived uniqueness. This seems like a particular case of that strategy.

It's not necessarily a sham, either: if the story you're telling convinces the
right customers that this is the right product for them, it may be providing
real value over the root product.

------
nathas
Given that they put the author's byline in the description, the odds that the
price jumps because it was written by someone established seems likely.

~~~
gjm11
The article says:

> Next, Walker asked some unknown writers to each write a short story that
> contained one of the objects.

so no, the price jump isn't because of stories written _by someone
established_. But I do think it likely that buyers thought of themselves as
buying _a piece of writing_ more than _an old pair of nail scissors_ (or
whatever). What was sold was the object _plus a printed copy of the story_.

To my mind, this largely invalidates these experiments as evidence that things
are valued more when accompanied by stories. (They probably are, but this
isn't good evidence.) Perhaps what it actually shows is that a short piece of
writing is valued more when accompanied by an appropriate artefact. Perhaps
what it shows is that you can often find someone to buy a short piece of
writing for a few tens of dollars. Perhaps what it shows is that anything
unusual and new will attract some attention -- in small quantities.

I'm reminded of the "Million Dollar Homepage" from back in 2005, recently
featured on HN. It was a clever idea; the creator found enough takers to make
his million dollars; but subsequent attempts at recreating the phenomenon
weren't so successful. No doubt it's possible to make a few thousand dollars a
year out of selling tchotchkes with stories. That doesn't tell you anything
about whether you can make much more from a larger-scale tchotchke-selling
business by attaching stories to everything. Maybe you can, maybe not.

------
alexPetrov
This article reminds me of something Christensen described in the Innovator's
Dilemma (or maybe it was in Solution). He spoke of thinking about your product
in the terms of what its job is. What are your users using it for, how can you
improve your product at doing this job, and how can you make more people aware
of your product's capability in doing that job?

------
chrischen
Putting it on eBay also exposes it to a larger and more liquid marketplace.

~~~
aaronbrethorst

        When Walker put the objects, along with their accompanying
        stories, up for sale on eBay...the value of the objects
        rose 2,700%...A miniature jar of mayonnaise he had
        purchased for less than a dollar sold for $51.00. A cracked
        ceramic horse head purchased for $1.29 sold for $46.00.
    

A larger, more liquid marketplace doesn't account for a miniature jar of mayo
selling for $51.

~~~
chrischen
It's more likely you'll encounter miniature jar of mayo enthusiasts on eBay
than it is that a bunch of them will by chance be at your garage sale.

This would account for at least part of the difference. The other part can be
accounted for by saying Barack O'Bama autographed the jar.

Also factor in shipping costs, which usually justify an increased price of
around $10.

------
logicallee
Actually, the provenance adds way more than 1000% or whatever. That 1000% is
the provenance discounted by the chance that it's totally made up and,
therefore, outright fraud.

Look at this story: [1]

"As Van de Hoeven recalled, they were sitting in her sun-flooded living room,
making small talk about how Zodiac could have been a great movie, had it not
been so slavishly devoted to ’70s period detail. When Tarantino noticed the
figurine on the mantle, he jumped up from the sectional couch."

That didn't happen. If it had, the figuring could be worth a lot more than
$50.

$50 - the new price - is in a lemon market of fake stories.

If they really want to test the price of a story, why not do it in a way that
isn't fraud?

Why don't they start with real stories about objects that have actually been
verified, in a printed book for example from which they can quote, and then
simply do the experiment by not mentioning this true story in some cases and
mentioning it in others?

This would decrease the "fraud discount" SIGNIFICENTLY since in the cases
where you DO mention the story, you can also mention the references that
actually back it up. There's no real chance you're just inventing it. For
example, if a distinctive custom object was photographed with Obama, you can
link to the photograph while "telling the story".

In the version where you don't tell the story, but only describe the object,
you don't link the photographic proof either.

That way you can really tell how much value the story adds, instaed of how
much value discounted by the chance (which is in this case the reality) that
it's just being made up.

[1] EDIT: for the source I followed their link "The project was so successful
(and so interesting) that they have now repeated it 5 times and put all the
results up on the web. It is also a book." which links to
[http://significantobjects.com/about/](http://significantobjects.com/about/)
\- I'm quoting from the first picture I followed on the right sidebar, since I
wanted to see what these stories sounded like.

~~~
chris11
I didn't find that story. But
[http://significantobjects.com/about/](http://significantobjects.com/about/)
states that care was taken to avoid the appearance that the story was real.
And other stories are obviously fake. E.g.
[http://significantobjects.com/2010/06/18/miniature-
pitcher-j...](http://significantobjects.com/2010/06/18/miniature-pitcher-joe-
meno-story/)

------
hef19898
Largely depends on the product itself. As already mentioned, art and antiques
are different from technology. But the author certainly has a point here.
That's why luxury brands can ask much higher prizes compared to non-luxury
brands that don't have anything to do with production cost.

But one way of looking at prices was somehow missed that is really important
in the production industry, at least from my point of view. Profit is prize
minus cost. This goes somewhat in the direction of the targeting a market and
engineering the product accordingly. But by regarding the actual selling prize
of a product as given instead of the actual production cost changes a lot. And
your not done by just engineering a product to a certain prize, if the market
changes you have to improve your cost base.

And the more your product is a commodity, the more important this part of
prizing gets as it is harder to boost prizes in this case. Something a lot of
companies have a hard time to understand, at least that's my experience.

------
mathattack
My interpretation is the story helps find the end user's need. It isn't just,
"Go Bla Bla Bla to everyone" Rather, it's find the story that appeals to the
one person you want to pay up.

------
polskibus
That's exactly what ad companies have been doing for years. Ad sells the
product using a story or generating one in your head.

