Why do infomericals sell their products for $19.99

I was curious to know if there was any market research or business
theories to support this trend of informercials selling their products
for $19.99. Now, I know not every product is at that price, but it
seems to be fairly prevalent.

I'm a med-student but I would consider business my second love. Long
story short, I want to have a cash-only office that charges $20 for a
15 minute office visit (a pretty radical idea as for as medicine goes).
But, I wanted to know if there were any business theories that
supported this plan.

Thanks,

Josh

Hi Josh,

There are a few theories on pricing.
The one that deals with your particular example is based on the fact
that people, in western cultures, evaluate numbers from left to right.
So we naturally place more value on the leftmost digit.


Josh wrote:
> I was curious to know if there was any market research or business
> theories to support this trend of informercials selling their products
> for $19.99. Now, I know not every product is at that price, but it
> seems to be fairly prevalent.
>
> I'm a med-student but I would consider business my second love. Long
> story short, I want to have a cash-only office that charges $20 for a
> 15 minute office visit (a pretty radical idea as for as medicine goes).
> But, I wanted to know if there were any business theories that
> supported this plan.
>
> Thanks,
>
> Josh
>
>

Josh wrote:
> I'm a med-student but I would consider business my second love. Long
> story short, I want to have a cash-only office that charges $20 for a
> 15 minute office visit (a pretty radical idea as for as medicine goes).

if you consider staff, equipment, utilities, rent, etc. I doubt that you
can break even on $20.-/15 minutes visit - let alone make a living.
I know that's not what you asked ...

As for the 19.99: I've been wondering about that for a long time
myself, but it seems to work.

Maren

Thanks for the input Maren,

Actually, I've done the math and it works out to making more than the
average Family Doctor. Its almost cliche to say, but Doctors are
horrible businessmen, and thats why most offices have so much overhead.

Heres my math for example: $20 * 15 min/pt * 4 pt/hr * 50 hr/wk * 50
wk/yr = ~$200K
That of course does not iclude overhead, but it also doesn't include
additional sources of revenue from groups visits, emails (a whole new
topic!), etc.

As for overhead, i'll have zero to one staff (if I have 1 employee,
i'll charge 25/hr to cover their wages), by being cash only i'll have a
90-95% return, electric medical record (GE's logician software is
500/mo). I'd love to talk about this in another group, but feel free
to check out my website @ http://freemarketdoctors.blogspot.com
thanks

Hi Konstantin,

Yeah, I've heard that about how we [western cultures] place more value
on the leftmost digit. I guess when we see 19.99, we think 19.00.
Interesting.

But i think there must have been some research that says $19.99 is the
number where people are the most willing to try a new product.
thanks
josh

Infomercial companies that offer products for $19.99 are generally
depending on subsequent sales to the customers who buy that product.
They typically do this in two ways-- First, by offering buyers
addtional products at the time of the sale--- when you call to order;
or secondly, to sell related items to these customers at a later time.
This works because the buyer of the $19.99 offer have identified
themselves as purchasers of certain items that will very likely buy
similar things. So in reality, the infomercial company is building a
customer list by breaking even or maybe even losing a little on the
initial sale, but making money on the second, third or fourth sale.
You would have to think about how you could apply the case of a medical
practice---
Jim McCraigh
Editor--- Direct Marketer's Digest
http://www.mccraigh.com

"Josh" <jumbehr@gmail.com> wrote in message
news:cqs0kd02tfn@enews2.newsguy.com...
>
> Thanks for the input Maren,
>
> Actually, I've done the math and it works out to making more than the
> average Family Doctor. Its almost cliche to say, but Doctors are
> horrible businessmen, and thats why most offices have so much overhead.
>
> Heres my math for example: $20 * 15 min/pt * 4 pt/hr * 50 hr/wk * 50
> wk/yr = ~$200K
> That of course does not iclude overhead, but it also doesn't include
> additional sources of revenue from groups visits, emails (a whole new
> topic!), etc.
>

How many more hours than 50 do you intend to work to take advantage of all
these other sources of income? Obviously you can't get 4 paitents per hour
in because not all visits will be exactly 15 minutes. There are also lunch
breaks and vacations. To see 4 patients per hour that means you must have
the patients all lined up in exam rooms which means you'll probably need at
least 3 and someone full time just cleaning each room after each patient.
Maybe if you were really fast you could see 3 patients per hour at 15
minutes each. That allows for 5 minutes of paperwork/computer entry by you
for each patient per hour. It doesn't sound like the quality of medicine I
want my doctor practicing.

> As for overhead, i'll have zero to one staff (if I have 1 employee,
> i'll charge 25/hr to cover their wages), by being cash only i'll have a
> 90-95% return, electric medical record (GE's logician software is
> 500/mo). I'd love to talk about this in another group, but feel free
> to check out my website @ http://freemarketdoctors.blogspot.com
> thanks

No thanks. Post here, discuss it here.

--
McWebber
No email replies read
If someone tells you to forward an email to all your friends
please forget that I'm your friend.

"Josh" <jumbehr@gmail.com> wrote in message
news:cqqc9n0295s@enews1.newsguy.com...
>
> I was curious to know if there was any market research or business
> theories to support this trend of informercials selling their products
> for $19.99. Now, I know not every product is at that price, but it
> seems to be fairly prevalent.

Watching the show and actually buying the product are two different
experiences. Try buying one of these products and see what happens. People
call for the knives and a shark on the other end of the phone also sells
them the salad bowls, the cookbook, the magazine subscription, the diet
pills, the video tape collection and the way overpriced "expedited" shipping
so that you receive your product in five days rather than six weeks.

> I'm a med-student but I would consider business my second love. Long
> story short, I want to have a cash-only office that charges $20 for a
> 15 minute office visit (a pretty radical idea as for as medicine goes).

I shudder at the thought of your proposal. I believe you are fooling
yourself.

Most doctors lack the knowledge they need to be successful in business. You
can say that about just about any group of people. Most basketball players,
most joggers, most husbands, most engineers, most teachers, most lawyers,
etc. Its not that these folks are not capable, its just that they haven't
dedicated themselves to gaining the knowledge, taking the risks and
practicing the skills.

> But, I wanted to know if there were any business theories that
> supported this plan.

There's more to it. Try buying the $20 knife set and see what happens.

Mike

http://miketurco.com

Thanks alot Jim, your explanation makes a lot of sense.

I'm not sure how I could really apply that to a medical practice
besides the idea of building up a clientele for my practice.

I was curious to see if there was a marketing principal that correlated
a product's price w/ a consumers willness to purchase. Then I was
hoping to be able to use that to support my vision of charging $20 b/c
(maybe people would use more preventative medicine if they knew it
would be cheap).

Thanks for the help

josh

"Konstantin Goudkov" <bcc-ng@aboutrealstuff.com> wrote in message
news:cqr1b401rtg@enews4.newsguy.com...
>
> Hi Josh,
>
> There are a few theories on pricing.
> The one that deals with your particular example is based on the fact
> that people, in western cultures, evaluate numbers from left to right.
> So we naturally place more value on the leftmost digit.
>

19.99 just sounds cheaper than $20. Same reason gas is priced with 9/10 at
the end. Once you hit $20 the guy charging $21 doesn't sound much higher.
But if you're charging 19.99 the guy charging $21 sounds a lot higher.


--
McWebber
No email replies read
If someone tells you to forward an email to all your friends
please forget that I'm your friend.