“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.)

Bob Bly

Bob Bly is an independent copywriter and consultant specializing in business-to-business and direct marketing. He has been hired as a consultant by such companies as Sony, Chemical Bank, J. Walter Thompson, Westinghouse, and Prentice-Hall. Bob is also the author of more than 50 books including The Complete Idiot’s Guide to Direct Marketing (Alpha Books), Targeted Public Relations, Selling Your Services, How to Promote Your Own Business, and Keeping Clients Satisfied. A phenomenal public speaker, Bob will share with you how easy it is to start your own business. Whether you’re ready to quit your job or are just looking to make a little money on the side, you’ll want to hear Bob’s advice.