What products and services sell best in a recession?
Hint: This is not a trick question. The answer is the one that immediately popped into your head when I asked it.
Before you started over-analyzing this…
The products and services that sell best in a recession are the cheaper ones. That’s right – the ones that cost less.
I recently read in a biography of Milton Hershey that he believed his business was recession-proof and depression-proof because he sold an affordable product. He reasoned that, even if a person couldn’t afford new shoes or a new car or a vacation, they could always afford a nickel for a Hershey’s chocolate bar. (That was the price in those days.)
Milton Hershey was right.
According to an article in Ad News, as the economy continued to tank in the fourth quarter of 2008, the Hershey company increased its advertising budget by 23 percent. And as consumers switched from expensive premium chocolates they no longer felt they could afford to Hershey’s, the company’s net income for the fourth quarter of 2008 rose 51 percent to $82 million.
Similarly, with the restaurant business in its worst slump since 1991, McDonald’s worldwide sales rose 7.1 percent in January 2009. Diners may not be able to afford steak anymore, but they can still afford a Big Mac.
I have found the same thing – consumer preference for lower-priced goods and services during an economic downturn – to hold true for the two little businesses I run: information marketing and freelance copywriting.
In my online publishing business, my low-priced products are e-books selling in the $19 to $79 range. My mid-range products are DVD and audio CD albums selling in the $100 to $150 range. And my high-end products are multimedia programs selling in the $300 to $1,000 range.
In recent months, my customers have clearly been telling me that (a) they are worried about money, (b) they really appreciate my reasonable prices, and (c) for now, they prefer offers for low-priced products.
They are not asking for special discounts or “recession sales.” They just want me to focus on offering products that sell for under $100, which seems to be the magic recession-proof price point for my market.
Whenever I advertise mid-range or high-priced products to my customer list, I always get at least one e-mail from a reader telling me she wants to buy the product… but can’t because she has lost her job!
If you are an information marketer, I suggest that, rather than fighting this trend, you accommodate your customers by:
• Expanding your product line, especially with the lower-priced products (like e-books).
• Offering your readers more free content (such as special reports and teleseminars).
• Bundling products into packages that enable customers to get related materials at handsome discounts (e.g., buy two e-books, get the third one free).
I am also finding that offering low-priced service options works for my freelance copywriting business.
To make $10,000 as a freelancer, you can either do one $10,000 project or five $2,000 projects. These days, I am doing a lot more $2,000 projects for clients who want to continue their marketing but are focused on controlling costs.
For instance, I am saving my clients money by helping them do more marketing online and a bit less offline. We are also using marketing methods that can be tested at minimal cost before rolling out the campaigns (e.g., small test mailings of 1,000 instead of 10,000).
One thing that has worked especially well is a new service bundle I call the “Starter Package.”
Normally, I charge $500 an hour for consulting. With a 10-hour minimum, payable in full in advance, that works out to $5,000 – affordable in normal times, not so affordable during an economic crisis. With the Starter Package, I offer new clients 90 minutes of my time for a flat fee of $750.
There’s no reduction in my hourly rate. I merely allow people to start working with me for a lower initial commitment.
I picked 90 minutes deliberately. Not only is it enough time to give prospects a taste of how my advice and copy can benefit them, but it comes in at a price point under $1,000. And that is within the comfort zone of a new client who doesn’t know me all that well.
More important, the Starter Package shows prospects that I empathize with their desire to cut back on spending and have designed a service to accommodate their smaller budgets.
Interestingly, what usually happens is that, after reviewing the Starter Package offer, prospects call me to get a quote for the full service they really want. And more often than not, that’s what they choose to go with.
So while I don’t actually do a lot of copywriting and consulting under the Starter Package arrangement, it makes prospects more comfortable with me as a vendor who respects their budget concerns and limitations. And that’s been keeping my freelance business active and profitable.
[Ed. Note: Bob Bly is a freelance copywriter and the author of more than 70 books. To subscribe to his free e-zine, The Direct Response Letter, and claim your free gift worth $116, click here now.
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