[OPINION] Field Report: Breaking the Price Barrier - Is $40 the new $20?

by Jordan Pine on Dec 14, 2015 6:00:00 PM DRTV

Breaking_the_Price_Barrier_Is_40_the_New_20-283978-edited.jpgThe statements, opinions, and advertisements expressed on the ERA Blog and other online entities owned by the Electronic Retailing Association are those of individual authors and companies and do not necessarily reflect the views of the Electronic Retailing Association.

The hot topic in the field right now is TeleBrands’ surprise hit, Star Shower. It’s a surprise because it contradicts two DRTV truisms:
  1. The holiday selling season is too short to execute a successful campaign. 
A device that projects red and green dots onto a home, TeleBrands’ hit will be one of the biggest items in recent history despite the fact it won’t be on the shelf after December.

  2. The price barrier for short form is $20. TeleBrands’ item is blowing out at twice that price.


Predictably, this will lead many industry players to discount everything they know and strike off in this new direction. Get ready for a ton of holiday-item TV tests leading up to Christmas 2016. Before that, watch as the $10 BOGO fades into obscurity and is replaced by $19.99, $29.99 and $39.99 offers. It’s fitting, I suppose. TeleBrands started the $10 BOGO trend that took over the industry after the last recession, and now the company is about to lead a new trend in the opposite direction.

It’s this pricing shift that interests me most. In my opinion, truism No. 1 is going to remain intact. I’m not so sure about truism No. 2. Is it possible that $40 is the new $20? Has the upper limit for short-form DRTV products more than doubled?

There is a growing body of evidence that it has. For example, Fred Vanore of Blue Moon Studios informs me that he has three short-form campaigns on the air with a $40 price point: Yes! by Finishing Touch, the American Aviator Watch (featuring Pawn Stars’ Rick Harrison) and Simply Straight, a new type of hair-styling tool that is getting a ton of social-media buzz. Perusing the Jordan Whitney Greensheet, I also notice InvenTel’s Dash Cam Pro has made it into the top 10.

There has always been an exception to the $20 rule: If the perceived value of an item is high enough, the impulse price for that item can also be higher. Black Friday is an extreme example. When is $999 an impulse price point? When major retailers are offering 4K Ultra HD TVs for that price, as they did after Thanksgiving of this year.

This relative-pricing effect explains Yes!, a case where the competition (no!no!) retails for $250. It also explains the Dash Cam Pro, a product famous for the viral videos it produces that used to retail for more than $100, and the American Aviator Watch, which also benefits from the perception that it’s a commemorative collectible.

Then there’s Simply Straight. Relative to other hair-styling tools on the market, its price is within the normal range. But that range also goes as high as $150 or more for ceramic straighteners. Because the product is first in a new category (hot-styling brushes), I suspect it’s benefitting from the lack of a clear value comparison.

That brings me back to Star Shower. The concept was first tested under the name Night Stars in the fall of 2014 with a price point of $19.99. Around that time an old client emailed to ask, How is it possible for TeleBrands to sell the product for that price? (My reply: “It isn’t.”) He had sourced the item himself, and his first cost was almost as high as TeleBrands’ end price. As proof of his point, he included a link to a similar product that was selling online for around $100. Two other industry players eventually tested the item at $80 and $60, respectively, which they viewed as optimistic value pricing.

Putting it all together, it seems the recipe for success at $40 is to find a high-demand product with a perceived value two or three times higher. Then you can break the old price barrier. Easy, right?

Photo by Stuart Miles/FreeDigitalPhotos.net

Jordan Pine is a consultant specializing in short-form DRTV and the author of The SciMark Report (scimark.blogspot.com).

Jordan Pine's blog
Get a2bFilfillment's FREE Ultimate Guide to Fulfillment e-Book
 
Subscribe for tips on how to grow your direct response marketing business!
Subscribe Now

Follow Us

New Call-to-action

Editorial Disclaimer

The statements, opinions, and advertisements expressed on the ERA Blog and other online entities owned by the Electronic Retailing Association are those of individual authors and companies and do not necessarily reflect the views of the Electronic Retailing Association.