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Ep. 3: David Ogilvy on Pricing and Value
This Selling Essentials Minute highlights an idea from the Quick Take training program, “Price Objections: Four Secrets Prospects Will Never Tell You”
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Voiceover: The Selling Essentials Minute. One good idea in about sixty seconds.
Back when ad agencies made most of their money from a standard 15% commission on media costs…
David Ogilvy: A consumer is not a moron, she’s your wife…
Voiceover: …ad legend David Ogilvy wrote an open letter to prospective clients.
“Insist on paying 16 %” to your agency,” he wrote. “The extra 1 percent won’t kill you, but it will double the agency’s normal profit, and you will get better service.”
Would YOU tell your prospects to pay more – just so your company could double its profits? That would NEVER work, would it?
Well, it worked for Dave. He retired HERE – and although he died in 1999, Ogilvy and Mather is still billing strong – around 10 billion dollars at last count.
1% of THAT works out to a whole lot of that “better service.”
So what’s the point?
Ogilvy: I wish I could be with you today…
Voiceover: Ogilvy knew that clients weren’t looking for low-price ads. They were looking for high-value ads.
And in the long run, a fair PRICE means you can DELIVER more value.
Of course, customers will test you. They’ll ask for discounts and incentives, happily take them if you cave — and then wonder why they’re not getting the value they expected.
So do right by them AND yourself. Insist on the price you deserve.
It’s what Dave would do.