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The Magic of a Dollar

“You can stroke people with words.”F. Scott Fitzgerald

It’s common knowledge that the word “free” is the most powerful word in the sales-and-marketing lexicon  — and that the free offer is almost always irresistible. But experienced marketers know that, at times, charging a dollar can be more effective and pull even better than the free offer. The old pros call this technique “the magic of a dollar.”

Here is a great example of the magic of a dollar at work … XYZ company was selling an accounting-software program with the USP (unique selling proposition) that it was “modifiable.” In other words, it was built on a popular database and a user proficient in that database could easily modify program features, functions, and screens to fit his specific business. It was a good program — but direct-mail packages selling the software barely broke even.

The software was priced as follows:

General Ledger: $79

Accounts Payable: $49

Accounts Receivable: $49

Inventory Control: $39

Payroll: $39

The total price for the complete package: $255

One day, the company decided to test a new mailing — with copy on the outer envelope that read:

Accounts Payable: $1

Accounts Receivable: $1

Inventory Control: $1

Payroll: $1

This time, recipients paid attention. After all, who sells software for $1?

A Johnson box at the top of the sales letter repeated the envelope copy but filled in one important missing detail:

Accounts Payable: $1.

Accounts Receivable: $1

Inventory Control: $1

Payroll: $1

… when you buy General Ledger for $251!

Notice that the total price of the complete software system remained the same: $255. But the new offer attracts attention by seeming to offer software at $1 per module.

Could you buy just Accounts Payable for $1? Yes — but it wouldn’t work, because the other modules all require General Ledger to function. “I hate the idea of this test,” the creator of the software complained. “It seems like a cheap gimmick.”

But he didn’t hate the results. The “$1-per-module” offer out-pulled the “straight” offer by 10:1 in gross revenue generated. A variation of the “magic-of-a-dollar” offer is the “magic-of-a-penny” offer. In direct mail, this is particularly effective when you glue a real penny to the top of the first page of your letter. In your letter, you then say something like this:

“The [premium/trial/evaluation/estimate] costs only a penny. And we’ve even enclosed the penny for you!”

Yes, these two techniques are gimmicks. But they work — sometimes, as I said earlier, even better than the almost-always-effective free offer.

Why? I suspect it’s because dollar and penny offers are much less common than free offers so they stand out and get more attention.

(Ed. Note: Bob Bly is the editor of Mailbox Millionaire, ETR’s program to help you start your own successful direct-mail business.)