Why 2x'ing your prices can 2x your sales

Price isn’t just a number. It’s a story you tell about your brand.

Premium scotch brand Chivas Regal was in big financial trouble.

They had gone from being one of the world’s bestselling spirits brands to almost losing it all.

Chivas Regal was created by two brothers, James & John Chivas, in the 1800s - owners of a small grocery store in Scotland.

Their creation eventually grew to be the fourth biggest scotch brand in the world.

But by the 1940s, their brand started seriously struggling.

Their best customers were suffering financially in the aftermath of World War II.

But instead of cutting their prices, Chivas Regal doubled them.

And their sales went through the roof.

Why?

Contrary to popular belief, pricing is 90% psychology and 10% math.

We don’t really know what something is supposed to cost - instead, we pick up Invisible Signals from the product and the context surrounding it.

Price, unsurprisingly, is one of those signals.

When something’s expensive, we think it must be high quality because it costs so much.

So when Chivas Regal doubled its prices, people started seeing it as higher quality, and sales exploded.

It was such a successful strategy that people started calling it the Chivas Regal Effect.

But it’s also known as the Price-Quality Effect.

It says we have a mental shortcut (heuristic) that subconsciously tells us:

“Higher quality equals higher price so higher price must equal higher quality.”

And most of the time, that mental shortcut is correct -

Think of a Ferrari (this one is called the Roma and it starts at $280,000).

Now think of a Toyota Corolla (starts at $22k).

Which one feels higher quality? More exclusive? More desirable?

A few years ago, I worked one-on-one with a handbag and leather accessories designer (KL).

Even though she was a gifted craftsman using high-end materials, KL’s bags just weren’t selling as well as she wanted.

Because KL had never priced a product before, she just defaulted to what’s called the Cost-Plus method.

That’s when you add up the price to make a product then add a margin on top to account for additional costs like marketing, employees, retail stores, returns, etc.

So for example, if your bag cost $100 in materials and $50 in labor, you could add a 25% margin on top to pay for marketing and shipping.

Which meant you’d be charging $187.50 for your bag based on your cost to create it.

The problem was that KL didn’t have an objective view on what her prices should be or why -

She also had some self-worth issues and imposter syndrome around how much she thought people would pay for her bags.

This combination of factors meant KL’s bags seem “too cheap.”

So I introduced her to some Psychological Pricing principles.

We raised her prices to reflect the craftsmanship of her bags, as well as the brand image and target buyer she wanted to attract.

Which put her closer in price to aspirational luxury handbags like Chanel, Gucci, Loewe, Hermes, and Louis Vuitton.

Not only did KL’s sales increase dramatically, but buyers began viewing her bags as investment pieces.

The higher price didn't just boost her revenue, it transformed how the market perceived her entire brand.

If you think raising your prices could be a good move, start by asking yourself a few questions:

• Does my customer buy my product to signal status or is it more utilitarian?

• Is my brand viewed as exclusive and/or aspirational? 

• Have we tested price elasticity in the past? Price elasticity is a way of measuring how much demand for your product changes when the price changes. If you’ve raised prices in the past and demand went up, not down, that’s an indicator that your product is a good fit for the Chivas Regal Effect.

These are the kinds of questions I’ve helped 100s of people answer in my one-on-one coaching, consulting, and Choice Hacking Pro community (now full).

If you’re ready to install a marketing system based on science, not guesswork, just respond to this email with the word “COACH” and I’ll share the details.

Until next time,
Jen

PS. There are still 3 spots available for The 3-Second Test. 

That’s where I audit your homepage or landing page to see how its performing during the critical first 3-seconds, when new users decide whether to stay and learn more about your offers or bounce forever.

You’ll get actionable, expert advice based on $250M+ in sales, 15 years of experience, and research-backed principles - at a price that’s accessible to brands of all sizes.

The best part? If your landing page or website passes The 3-Second Test, I’ll refund the cost of the audit. Because excellence should be rewarded.

I sent everyone the invite yesterday, but if you want the details just reply to this email with the word “DETAILS” and I’ll share.