Key Takeaways
- American Express Publishing tested four prices for the same publication.
- A price of $19.99 generated 10% more sales than the $19.95 control.
- The lowest tested price—$19.49—produced the worst results.
- A lower price does not automatically produce more orders.
- Small pricing differences can significantly change response.
- Customers and prospects may interpret price as a signal of quality, credibility, or value.
- The marketplace—not opinions, assumptions, or conventional wisdom—determines the winning price.
- Pricing should be tested based on sales, revenue, acquisition cost, and overall profitability.
Could changing your price by only four cents increase sales by 10%?
It sounds unlikely.
But that is exactly what happened in an American Express Publishing test.
And the most surprising part was not simply that the higher price won.
It was that the lowest price performed the worst.
This test demonstrates why pricing should never be based entirely on instinct, internal opinions, competitor pricing, or what someone believes customers or prospects will do.
A few cents can mean the difference between a winning offer and a disappointing result.
The American Express Publishing Price Test
American Express Publishing tested different price points for one of its publications.
The established control price was:
$19.95
American Express Publishing then tested three alternative prices against that control:
- $19.97
- $19.99
- $19.49
Which price would you have predicted would generate the most sales?
Many marketers might assume the lowest price—$19.49—would win.
After all, it offered customers or prospects the greatest apparent savings.
Others might expect the differences to be too small to produce any meaningful change.
But the marketplace delivered a very different answer.
The Winning Price Was $19.99.
The $19.99 price generated 10% better sales than the $19.95 control.
Think about that.
American Express Publishing increased the price by only four cents—and sales increased by 10%.
The company did not need to lower the price.
It did not need to offer a larger discount.
It did not need to change the publication.
It simply tested a slightly different price point.
The marketplace responded.
The Lowest Price Produced the Worst Results
The biggest surprise was what happened with the $19.49 price.
It was the lowest price in the test.
Yet it was also the worst performing price point.
That result challenges one of the most common—and potentially costly—assumptions in marketing:
A lower price will automatically produce more sales.
Sometimes it will.
Sometimes it will not.
In this American Express Publishing test, customers or prospects responded more favorably to $19.99 than to $19.49.
The higher price did not discourage the sale.
It increased response.
Why Did $19.99 Beat $19.49?
The test tells us what happened.
It does not definitively tell us why it happened.
There are several possible explanations.
But they remain theories.
The test result is the fact.
That distinction is critical.
The Marketplace Is Always Right
As I say to audiences and clients:
We can guess. We can think we know. But the reality is that the marketplace is always right.
Executives can debate.
Marketing teams can conduct research or polling.
Salespeople can offer opinions.
Consultants can make predictions.
Customers and prospects settle the argument.
They do that through their response—or lack of response—to the offer.
That is why scientific testing is so powerful.
It replaces assumptions with evidence.
It reveals what customers or prospects actually do—not what we think they should do.
A Small Change Can Produce a Major Difference
At first glance, the difference between $19.95 and $19.99 appears insignificant.
It is only four cents.
But the difference in sales was not insignificant.
It was 10%.
A four-cent difference could translate into tens of thousands—or potentially hundreds of thousands—of dollars in additional revenue, depending on the size and economics of the campaign.
That is why even seemingly minor pricing decisions deserve to be tested.
Do Not Assume the Lowest Price Will Win
Many companies lower prices because they believe customers or prospects are primarily motivated by savings.
But price communicates more than cost.
It can also communicate:
● Quality
● Credibility
● Exclusivity
● Confidence
● Positioning
● Expected results
● Perceived value
A price that is too low can sometimes weaken an offer.
Customers or prospects may wonder whether the product is lower quality.
They may question whether the promised value is believable.
They may perceive the product as ordinary rather than desirable.
This does not mean that higher prices always win.
It means you should not assume that lower prices always win.
You must test.
Seven Pricing Tests Worth Considering
The American Express Publishing example focused on small changes in the price itself.
But marketers can test many other aspects of pricing and offer presentation:
- Different price points – Test whether a modest increase or decrease changes response, revenue, or profitability.
- Different price endings – Compare prices ending in .95, .97, .99, or a whole-dollar amount.
- One payment versus installments – A payment plan may make a higher-priced product feel more affordable to customers or prospects.
- A discount versus an added bonus – Sometimes preserving the price and increasing value will outperform cutting the price.
- Free shipping versus a lower product price – Customers or prospects may respond differently depending on how savings are presented.
- Monthly versus annual pricing – Subscription companies should test both the payment structure and the way savings are explained.
- Premium versus standard options – A premium choice can increase average order value while also making the standard option appear more affordable.
The correct strategy cannot be determined by opinion alone.
It must be determined through disciplined testing.
Do Not Guess—Test
Your price is not merely an accounting decision.
It is part of your marketing.
It influences positioning.
It affects perceived value.
It changes response.
And it can dramatically affect revenue and profitability.
That is not theory.
That is the marketplace speaking.
Action:
Could the Wrong Price Be Costing You Sales?
You may believe your current price is right.
Your team may have logical reasons for choosing it.
Your competitors may charge something similar.
But unless you have tested alternative prices and offer structures, you may be leaving substantial sales and profits on the table.
At Creative Direct Marketing Group—CDMG, we have conducted more than 10,000 marketing tests across a wide variety of industries, offers, audiences, and media channels.
We help companies test more than price.
We examine the complete offer—including positioning, bonuses, payment options, guarantees, creative, messaging, landing pages, and media—to identify what customers or prospects actually respond to.
Contact Michael and the CDMG team.
We can review your current pricing and offer strategy, identify the most promising testing opportunities, and help you develop a disciplined test designed to increase response, revenue, and marketing ROI.
One carefully structured test could reveal a profit opportunity your company has been overlooking for years.
Call Michael at 615-933-4647 or email him at [email protected] to discuss how CDMG can help you improve your pricing, offer, and marketing results.
FAQs:
Q: What did the American Express Publishing price test reveal?
A: The test showed that a four-cent price increase from $19.95 to $19.99 increased sales by 10%. The higher price performed better than the original control price.
Q: Did the lowest price generate the most sales?
A: No. The $19.49 price produced the worst results in the test. A lower price does not always create more demand.
Q: Why should companies test pricing?
A: Pricing affects perceived value, credibility, and customer response. Testing reveals what customers actually do instead of relying on assumptions.
Q: Can a small price change impact revenue?
A: Yes. Even a few cents can create a significant difference in sales and profitability. Small pricing adjustments can produce major financial results.
Q: Does a lower price always make an offer stronger?
A: No. A lower price can sometimes reduce perceived quality or value. The right price must be determined through testing.
Q: What pricing factors should marketers test?
A: Marketers should test price points, payment options, discounts, bonuses, shipping offers, subscription plans, and premium options. The goal is to find the offer that produces the best results.
About Craig Huey:
Craig Huey is a nationally recognized direct response marketing expert, author, and speaker. He is president of Creative Direct Marketing Group (CDMG), where he has helped businesses generate millions of leads and sales through accountable advertising and breakthrough campaigns. He is also the publisher of Direct Marketing Update and The Huey Alert, and author of several books including The Great Deception and The Christian Voter.
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