Melina Palmer: How to Apply Behavioral Economics So Customers Buy

Hello, my friend, and welcome to another exciting episode of Negotiate Anything Live. In this special segment, we're sharing one of our LinkedIn Live events where listeners like you can join the conversation and shape the episode with your comments and questions. We've put a link to the event in the description of today's episode, but make sure to follow me on LinkedIn so you can join the conversation next time. I'm really glad you're with us today. We with over 10 million downloads and listeners from more than 180 different countries, it's dedicated listeners just like you who have made Negotiate Anything the number one negotiation podcast in the world. I'm your host, Kwame Christian. I'm a business lawyer, mediator, author, and the proud CEO of the American Negotiation Institute. Now, before we dive into today's episode, I have a golden opportunity for those of you who recognize the power of negotiation in your professional lives. At the American Negotiation Institute, we've crafted specialized keynotes and workshops tailored for those very needs. We've transformed the negotiation skills of professionals worldwide and we're eager to do the same for you. We believe the best things in life are on the other side of difficult conversations. And our goal is to help you improve your lives and the lives of those around you, one difficult conversation at a time. Don't let another challenging conversation leave you second guessing. Click the link in the description to discover how we can help you find confidence in conflict, negotiate better deals, and have stronger relationships. Because in the world of business, every conversation counts. And now, without further ado, let's jump into the interview. All right, everybody, welcome to another exciting episode of Negotiate Anything Live. We're here with Melina Palmer, one of my good friends. Thanks for joining us.

Of course. Thanks for having me.

It's our pleasure. So before we start off, we like to wait to get a critical mass of people on the LinkedIn Live. And there's usually a 30 second delay. So what we're going to do, this is my favorite part, what I do is I ramble idly for a little bit until people start to come in and then we see the comments. It's okay, Kwame, you can start. You can go. So as you all are coming in, just put in the comments, let us know where you're coming in from today, which part of the world, and then once we start to see some comments rolling in that we can start like that. So, Molina, get us started. Where are you coming in from?

I am in the greater Seattle area. I'm in Washington state and I know Kwame we've been joking and talking a bit about our. Our football rivalry. That's going to be really happening. So we got to say go, dogs, for anybody who's here from. From Washington State. Now that we're, you know, number two.

I know. This is good. Yeah. So of course, everybody knows I'm an Ohio State Buckeye, part of the Ohio State University. And is this. I'm treating this kind of like a political race. Okay. So my candidate has dropped out, and now I am endorsing the Huskies to win.

But Jennifer might disagree with us since she's coming in from. From Austin, you know, since we're plain Texas in that.

Oh, right. Yes. Welcome, Jennifer. So you can. You can, you know, you know, harass Molina here from the sidelines. I accept it with some Texas propaganda. That'd be good.

I get a gig. Them too, which potentially Austin doesn't like either. So, you know, do what we gotta do. I'm.

That's awesome. Well, welcome, Jennifer. This is good. So we're seeing people start to come in, and this tells me that we are live. Like, it's actually working. So we can roll. Let's roll. So, Molina, how about we just start off by telling the listeners about yourself and what you do.

Yeah. So my name is Melina Palmer. I am the CEO of a company called the Brainy Business. I also host a podcast with the same name, and I've written a couple of books in applied behavioral economics, which is the psychology of why people buy. And I like to say in the work that I do is helping people understand how to better communicate so that customers buy and employees buy in. And so, yeah, that's just a little bit about me.

Love it. And everybody, you have to check out Molina's podcast. It's one of my favorites, and it's fun. I don't know if I've explicitly told you this, but before we started to, like, we became friends, I was a fan of your show beforehand. It's so cool.

No, well, I. I appreciate it. And I'm sure that at least in part, that was from Brian Ahern, our. Our mutual buddy here, of which I was just thanking him when you were posting on this. To say, like, this wouldn't a thing if it weren't for Brian making that intro. So thanks, Brian.

Yeah. Shout out to Brian. Shout out to Brian. This is great. We have also some more people. We have Mobina from Pakistan, all the way from Pakistan, So thank you for coming in. And a Nittany Lion. That's good. We can get along with you Nittany Lions from Penn State. That's good. Well, perfect. I'm. I'm excited today because we. You've been on the show a number of times. I've been on your show a number of times, and we. We like to get nerdy about the. The psychology of persuasion, human interaction here. But today, I really want to zoom in on your most recent book, because this is really exciting. And for me, as I was. As I was reading it, I remember just saying to myself, man, I wish I would have had this back when I started the American Negotiation Institute, because pricing is so hard to do. So can you just set the stage and tell us about the book and what inspired you to write this one?

Yeah. So this is my third book, and I'm very excited to have it be, you know, coming out here. It'll be coming out January 9th, 24th, but it is on, you know, order, as books are. And so really, like you said, pricing is one of those things that people just really hate. It's this, like, necessary evil of business. And really, all sizes, all 10 years. People struggle with pricing consistently. And a big piece of that has to do with the psychology behind it in our own brains and putting too much weight on the wrong things. And what I found over the years in working with clients on this is that you end up in this space of you can put it off for a really long time. So, you know, let's say you've got a launch coming in six months. It's really easy to say, you know, next week or next month or, you know, down the line, I'm going to be really able to dedicate time to research and work on pricing. And you keep putting it off and putting it off, and you have these big ideas, and then, you know, one day you wake up and the launches in a week, and you haven't finalized the prices yet. And so you kind of scramble and pick something out of the air that feels convenient. It's usually like a dollar less than your biggest competitor or some percentage markup of what you've been charging to or what your costs are. And you then vow, you know, three or six months down the line, once we get through the launch, then we'll really invest in, you know, getting this pricing right once we have some more data or whatever it is. And that doesn't really happen either. It just gets to sit out there and never be really thought through. But the thing is, confidence in your pricing and in that sales process is so impactful on whether or not someone feels good about buying from you. And so knowing that you, you've done it right, you followed the steps, you've got that psychology in check both for you and your team and who you're selling to is so, so important. So this book is in knowing that most people when they are looking for help with pricing, they are at the point of oh please just do it for me is where people are feeling. I wrote the book that is as close to please just do it for me as I can get in just the. Here are the questions to answer. Here are the things to think about in the order that you should do them and the process and help you to just set those prices and know how to present them in the best way so that they're more likely to lead to conversions.

This is incredible. And for me I was, I was laughing as you were saying these things because I feel so seen pricing has been so hard. And you know, for some people listening, they might say this is about pricing, not negotiation. Au contraire. More this is, this is not. Because when you think about your negotiations, like you said Molina, confidence is a quintessential element of negotiation success. So let's say you have all the skills, you know how to ask open ended questions, you know how to overcome objections and things like that. You have these fundamental skills of negotiation, but then you're not confident in your pricing, what ends up happening? You go from saying the cost for this consulting service is $100,000 to the cost for this consulting service is $100,000. As you look with an upward intonation, try to see how that resonates with them. And people can sense that lack of confidence. And if you are not confident in your own numbers, then you will not be confident in the delivery of said numbers in the middle of a negotiation. And the pricing is often the starting point for these high level discussions. So this is absolutely critical. And I want to go a bit deeper into the psychology of the person setting the prices. We talked about some of the things that gets in the way. You, you mentioned in passing putting too much weight on the wrong thing. Can you go a little bit deeper on that element?

Yeah, for sure. And so in the first part of the book, just talk about some real things about the brain, some of the price problems that we encounter. And that one of those being far too few people even consider psychology and its importance on setting prices. And that is not how it should. It's really central to everything. In part two of the book, I have six categories or the chapters there of areas to be making decisions and working on the first of them is called you because you are the biggest thing you hurdle to your own success, which we've talked about a little bit. So there are four elements that come up, kind of these biases, heuristics that work together to keep us stuck, that I talk about a lot. So we've got optimism bias. So we think we're going to be better, faster, smarter, stronger than everyone else, including the S of five minutes, minutes ago, we have planning fallacy where we don't properly allocate for all the stuff that's going to come up. That external thing, the meetings, the, the fires, the emails. Right. Those things that always happen, we just get distracted. Right. We need to plan for those better. We also have time discounting, where it's easy to put the thing off for tomorrow, which I talked about a little bit there. And then the last is bike shedding, which is where something that's not that important feels incredibly important in the moment. And one of the key places I see this come up in pricing is people dwell a lot like really focus in on the specific number. So this question of should I end my prices in a 5, a 7, a 9 or a 0? And you may just spin on that for days, weeks, months, right. Of the very, very special perfect, perfect number. And the thing is, really, once you determine one decision of a kind of category, you go A or B. And in this case, I talk about quality businesses or value businesses and I define them in the book. If you're a quality business, you know your luxury goods and things go with the rounded number, be the zero. In the case of a value where you're looking to be a bargain, a discount rounding down is good. And once you've made that choice, it doesn't really matter what you round down to 9, 7, 5, pick what resonates with you and move forward. Right. We don't need to waste time on a decision like that. But underlying thoughts about what your customer cares about, what their values are, what's going to be that problem that you're solving for for them, how you're able to connect with what it is that they're trying to solve. You know the truth about pricing. As we've said, that's the name of the book, the Truth About Pricing. I tell you what, the truth is on page three. So we're not giving anything away here when I tell you that the truth is pricing isn't about the price. All the stuff that happens before we get to the price matters more than the price itself. And in reality. And a big piece of this U chapter is expanding our horizon to know the that you can sell anything for any amount that you want. And I give an example of grilled cheese sandwiches in the book, which I'll pause here. And if you wanted me to continue to talk about grilled cheese, I, I can. But showing how you can even sell a grilled cheese for an exorbitant amount of money.

Hello my friends. Before we get back to today's episode, I want to ask you a question. Have you ever wondered how to elevate your team's negotiation game and how you can help the folks on your team have better difficult conversations? At the American Negotiation Institute, we offer transformative keynotes and workshops tailored to empower professionals with top tier negotiation and conflict resolution skills. Whether it's a keynote for your next event or hands on training for your team, we've got you covered. Don't just negotiate. Master the art with the American Negotiation Institute. Click the link in the description to find out more. Elevate, negotiate and succeed. Oh, this is one of those times where I forget that I'm interviewing somebody and I just, I'm just taking all of these notes. Molina. I just haven't stopped taking notes. This is incredible. And I know a few members of the ANI team are listening to this and I will make sure that we, we drop this to the team because we just did a three or four hour strategy session and literally every single thing that you talked about was part of the strategy session. And if I had this conversation with you beforehand, we would have assigned it to everybody beforehand because this is great and so many people could, can resonate with this because it, and relate to this because we can say psychologically we felt that tension that, that challenge when it comes to this. But then we're also recognizing, yeah, we are focusing on a lot of these, the, the, the same things that can lead us astray talking about the psychology. So just a quick recap for everybody. The optimism bias, the planning, fallacy time discounting and bike shedding. Each of those things. Again, we can see how this goes beyond pricing. This just goes to life in general, but it goes to pricing. In a transactional type of situation, we recognize that the price is often the beginning point of the negotiation. But then as we prepare for the negotiation and position ourselves effectively and strategically within our businesses or within our personal brand, we can see how optimism bias, planning, fallacy time discounting and bike shedding can actually lead us to make bad decisions, which puts us in a worse position. Which Makes it harder for us to negotiate effectively when we are talking about price. So I'm just, I just wanted to recap some of this brilliance for everybody because this was, this has been a masterclass thus far.

Oh, thank you. I appreciate it. And there's a reason I think it's important to note as well. Like you said, having neon and people saying, hey, why are we talking about pricing? I thought this was negotiation when I persuaded you to write the forward to the truth about pricing, in the same way of saying, hey, I know it's about pricing, but pricing is negotiation, you know, in the same way. And so I am so thankful and appreciative that you did write the forward for the book. So all fans of Kwame know that, like, I get it. I'm here with you.

That's right. It's got the Kwame and Ani stamp of approval right there. This is great. And now listen, we are not just going to talk about grilled cheese in passing. You're not going to tempt us. You got to tell us the story about this. This is cool.

Oh, good. Oh, I'm happy to. I love the grilled cheese example. And so what I'll say here is if we think about a grilled cheese sandwich, even people that can't cook anything, right, like how to boil water, they're googling, right? They need to figure. They could probably figure out how to make a grilled cheese. It's a pretty easy thing. And the ingredients are incredibly affordable, right? So maybe it's a dollar to make a grilled cheese sandwich, but let's imagine you are going to go buy one. It's time. You're going to invest. And this could be a point. We have so many great comments here in the chat. I see my friend Matt Johnson here, who's amazing. Bethany and Jennifer, and lots of great comments in here. So if you were going to go buy a grilled cheese sandwich, right? So what's the most you can imagine paying for one? Bethany says she thinks she might have had the grilled cheese I'm referring to. So I'm interested if she'll put like the exact number of what this one is. But Kwame, while they're maybe putting these in here, if you're, like, really desperate for a grilled cheese, how much would you pay for one, do you think?

Desperate for a grilled cheese. I've never described myself, never felt that way for a grilled cheese sandwich. But I think I, I would go up to if, if somebody can convince me it's Gourmet. I could go up to five. I could see. I could see. All right, well, we got, we have some special bread, maybe some special cheese, a secret Krabby Patty style recipe maybe, you know, then I might be willing to go up to like 5, maybe 5.99 or let me say 6, because this is, this is luxury pricing for a grilled cheese. So $6.

All right, so, so Kwame says five or six dollars for the epic grilled cheese of which that's about what they charge at five guys, by the way, Jennifer has said $15. So we're seeing, we're seeing a bit here. I have had people, okay, so Bethany says she's paid about 12 for a grilled cheese and a simple side. And you know, sometimes I have people where they're, they'll even say like, if this is the grilled cheese, that they would do. Okay, Laura, Hi. Laura says 15. I've seen people say 20. 25 even. Okay, Jenny says $16 at a resort. So there's a restaurant in New York, it's called Serendipity 3. They have a grilled cheese sandwich on their menu for. Drumroll. $214. 214 grilled cheese sandwich, which they also have 200 french fries and they have a thousand dollar vanilla sundae that they sell. And people do buy them. Right? So people buy these. It's not necessarily always their job to be purchased. So in many cases they work as an anchor. And I know, you know, Kwame, you've been on my show talking about anchoring and negotiation and the value there. And it's so important with pricing and Relativity too. Bethany apparently did not have this particular grilled cheese. Yeah, it's got, you know, flecks of gold in the crust and it's made with Dom Perignon champagne and all these things, or I talk about the specifics. So perhaps it is something that is set as a PR stunt. It's one of their Guinness World record holding items as the world's most expensive sandwich. And if you were going to Serendipity 3, you may order a $35 sandwich. I'm not going to go for 20. The $200 thing. Right. But yeah, I could get the 30, the $35 one. And you can bet I'm going to share about it on social media and I'm going to post and say, look, look where I am. How amazing. Right? We're talking about it. So the anchor of that really high thing has changed our perception. And I know when I've talked about this before where you're saying, okay, 15 maybe. But then when I said 200 and then say 35, you're like, yeah, I could, I could get behind that. Right. I feel that I could do it. Right. So this is showing again. We could sell grilled cheese for, you know, famously expensive their 200 fries. They launched with when they were coming back to say they're coming back out of the pandemic. The wait list was 8 to 10 weeks for $200 french fries at Serendipity 3. So it's amazing the stuff that they're doing there. And I always too like to make the one more point here that it's not even. Even though they have a record for it, it's not the most expensive, expensive grilled cheese. Does anyone remember the Virgin Mary grilled cheese sandwich? It's sold on ebay. So there was a woman who went and took a bite out of her grilled cheese, looked down and saw the face of the Virgin Mary in her grilled cheese sandwich, which she then put into a clear container with cotton balls and reportedly had sitting on her nightstand for 10 years before she auctioned it off on ebay. And it didn't get a speck of mold in its 10 years because of its divine origins or whatnot. It sold for $28,000 after getting 38, I believe, bids on ebay. And so most people wouldn't pay anything for a 10 year old sandwich. So, you know, you're. We're limiting our category of who's willing to buy. But you know, if you think about the market, you only need a few people, right, to make those bids and buy the $28,000 thing, if that's what you're selling and you need, you know, there are a few more to buy at the $200 price. And even the Five Guys grilled cheese that they sell, I think for 439, probably depending on where you are, can be these different strategies around something as simple as a grilled cheese sandwich. So again, there's a market for it. You can sell really anything for any price you want if you kind of get out of your own way.

This is unreal. First, like, initial thoughts, gross. Very, very gross. You know, Second of all, there are so many other thoughts, like you must be familiar with the Virgin Mary because most people are not exactly sure what she looks like. But leaving these things aside, this is, I hope you all feel a lot more confident because when you're thinking about the things that you sell, I'm hoping that you, you are giving A little bit more value than like an old sandwich. Right. But you can recognize how just the story that goes along with the way that you're presenting everything can have a profound impact on the perceived value of the other side. And I think that's the key word, perceived value. Because me, I'm a lawyer, I'm skeptical, but I'm not going to lie. Molina, when you said $214, my first thought was, I'm going to try it and I'll be the judge of that.

Is it worth it? I'm gonna, I'm gonna check that out.

I need to know. This is great. And, and I think it shows how broad the pricing strategy can be because there's more than just the sale of the specific thing at a specific price. Like you said, it provides an anchor and it makes every other exorbitant price seem more reasonable in comparison. That's just one example of the many other trickle down psychological effects of pricing of one thing can have on other things. Wow. When, when you think about pricing, let's focus on the word perception too, because there's going to be that perceived value. And we can say, all right, I'm not going to pay $28,000 for this sandwich. But clearly there are multiple people, 38 that are willing to take a shot at getting that. And so can you go deeper into perception and how perceived value will play a role into this?

Yeah, definitely. We. And when you were talking a little bit there about how we talk about things. So part three of the Truth about Pricing is getting into first, the first chapter there is my framework, which is called it's not about the cookie. And then we talk about the choice that we're where we get into what's called choice architecture in behavioral science. And how we present information to people makes a big impact on what, what they end up choosing. I also talk about then the placement and give templates for. If you're putting your pricing the three kind of things everybody needs when it gets into pricing. If you have these three things, you're really going to be set in almost any situation. When someone asks you for your numbers and so planning them in advance, I give you a template and advice for how to put your numbers in a chart in a like written vertical type of form. Like if you're having to send things in an email or a longer description there and then in a verbal type of a script. Because we all end up having to put pitch at some point or another and things can go wrong there. As you showed Kwame, when you're saying, okay, so it's, oh, it's a hundred thousand. I know that may seem like a lot, but. Right. And then we've just killed everything. There's no chance that's ever going to happen. So that perception of value, it's really important to be both in the way you're thinking about that customer, what they care about, how you're going to help them as well as your own. You have to believe in the value and be able to say the price like it's the time of day or the weather. So getting out of your own head and being able to say it's a hundred thousand dollars, it's a hundred thousand dollars, I'm charging a hundred thousand dollars to where you can just say it, not being all weird about it, is a really key piece. So I know that not everybody loves the idea of role playing, but it's absolutely worth it. And if you think about something like accounting services, right. If you are an accountant, you would very much undervalue what it is that you bring to the table and what someone is paying for. Especially because you end up charging by the hour, by in, you know, minute type blocks and things. And for me, like doing the numbers and having to waste that time, that will take me hours of time of something that you could maybe do in 15 minutes. But if you're just thinking about the 15 minutes it'll take you to do the thing and you're not valuing all of what I get back and all the hundred thousand dollar contracts I can go sell if I'm not dealing with worrying about numbers and things and positioning it, framing it in a way that is talking about what it's going to give to me, pulling me into the story. So framing is one of the aspects of the, it's not about the cookie framework. So is priming, which is the scent of the cookies that draws us in. Right. So making it enticing and interesting. I'm going to, ooh, that's really interesting. What are we doing over here? I'm bought in before you've even tried to sell me something. And understanding that value, what's going to draw me in, is incredibly important when it comes to pricing and selling.

This is so good. It seems like you might have written a book on this or something. It's strange, right? This is great. I obviously we talk all the time so I could keep on going, but I want to make sure that the listeners, the folks who are in the audience have an opportunity to ask, ask some questions. So listen, if you have questions, put it in the chat, and Simone will highlight them and we'll. We'll chat. But I. I also want to give you an opportunity to talk about the. The golden octopus story too. That's a. That is a fun one. And since it's. I could, you know, depending on the camera angle, we could see it.

Okay. Yeah, I know. He'll. He'll show up when we. Yeah. So the golden octopus, which, when this expands here, we'll see, is. Is taking up space here next to where I guess the truth about pricing will be going soon enough. But. So the first chapter of the book is called the Golden Octopus. And I talk about how when we were going to be. When my husband, now husband, and I were living in Seattle, we were going around, we love this HomeGoods shop. And there was this beautiful golden octopus there that I loved so much. And I never really thought about buying it, but I just really enjoyed it. And it was something that I always thought was so beautiful and had looked at. Octopus is my favorite animal, btw. So with that, you go. And when we were going to be moving out of the city, we were just, you know, going by all of our favorite spots and we went to go, you know, say, say goodbye to the octopus. And my husband Aaron recommended that I buy it. And it became this symbol of my new life in entrepreneurship and starting this journey. And it tied in with my identity and all these things that I'm about. And it's one of the few things I still have from that time because it means so much to me. And the thing is, I couldn't tell you how much I paid for it. I have no idea how much it costs. It's less than $50, I'm pretty sure. So we know it's not a real gold octopus, for sure, but that's not the point because if someone was gonna try to pay me $25 or $50 or a hundred dollars to buy the octopus, I really wouldn't sell it because, like, what does that say about me, you know, and my journey and what I'm all about here? And it's, you know, a moot point because no one would pay anything for it. It's just like a paperweight, basically. But this thing, understanding how brands and products and services tie in with what we think about ourselves, our identities, and how we, you know, shape our perception of the world. It's really important to understand that role that you and your organization play when about you think, think about pitching items and things to customers.

I love it. Such a Great story. I didn't even put it together. The octopus is your favorite animal. That's my, my brother's favorite animal. Animal too. That is great.

It's the best one.

Yeah. This is great. So shout out to. To Aaron who's making an appearance, who is now that I now I know. Extremely tall and extremely organized.

Yes.

This is great. And let's highlight this comment from Peter, too. I love this comment from Peter. So one of the greatest frustrations, one of his greatest frustrations is when price is mistaken for value. Price and value have nothing to do with each other. So this is a brilliant but very nuanced point. So I just want to highlight that and want to get your thoughts on that. Molina.

Yeah, and I have an episode on the brainy business that's called what is Value? And talking about the difference between price, cost and value. And in the case, you know, we already talked about this a bit with when we look at the grilled cheese sandwiches, right? So the, the cost of the item you may buy, you know, the different pieces are Nowhere near the $214 you sell it for. And we think about the value that something is, is giving to someone in this space of again, what it means to me, how it layers in. We think about the octopus. And when you rise up to this new, you know, we've got the perceived value, the way that we think about things, what they say about us, it shapes our perceptions in a different way that it can transcend above price. And the problem is when people are looking and it's time to set prices, get really fixated again on the exact, you know, here's the does it end in a five or a seven sort of a question. And we're looking at the, the difference of a penny and what we think someone's going to be thinking, you know, from across the street and if they're looking at our competitor over there, but it's just not the way that people are typically buying items. And so understanding what you're allowing that person to do, the relief it's providing to them, you know, these levels of value are really important when you consider what you would charge for something. For sure.

Absolutely. This is great. And Peter, thank you for that comment because I agree. I think this is something that's really important for people to understand. And the deeper our understanding, the, the more effective we will be when it comes to these pricing conversations too. We have a great comment here from Bethany. So the question is, what would be the number one way to change our perception of pricing? Oh, that's cool.

So I will answer this in what I believe you're getting at here, and if I missed the point, please let me know. But in the case of setting prices, because that's really more of what the book is about, even though we have examples of buying a lot throughout, I think the biggest thing to do is to get out of your own way and to ask really good and thoughtful questions. I love working with clients on a process called question storming instead of brainstorming, where we're able to take a known truth and attack it with questions, essentially. And so things that you say or believe that everyone just agrees with, like we can't charge more than a certain number for this, or we can only do that, or no one would pay for this this way, or people don't buy this in a subscription. No one else is doing that, so we can't. And we just believe it to be true. Just because that's how it's always been done and our hurting brain believes that that's the way it has to be, doesn't mean that it's actually true. And so taking the time to stop, be thoughtful, reflect, ask questions, and say, well, what if we did it this other way? Or how can I find an example where this isn't the case? You know, we've talked a lot about being able to raise prices and we're looking at lifting things up mostly because that's where people struggle the most. I have found that being said, that's not the right path for everyone. And even, you know, we talked about the value brands a little bit. And a brand like Costco I talk about a couple of times in the book. And Costco has proven that you can lower prices in a way that is showcasing the value to your, in their case, members and being able to have that be felt through everything they do. They are all about charging low prices for things. And I give an a couple examples. So one being they have their $50 hot dog combo that they've said they will never raise the price on, ever. And it's something, it's they've never raised it in the 30, 40 years that it's been around. And that's what it is. And they also have their rotisserie chickens, which are only 4.99. And these are things that people know there's really great value. And even as other people raise prices, they don't. And we may say, well, how much money do they make on those chickens? And you know, the hot dog combos every year and actually it's been reported that Costco loses between 30 and 40 million dollars a year on the rotisserie chickens. On their own, we say, why would they possibly do this? Why would you commit to selling something that's losing you that much money? And the thing is, when we think about Costco and you look and you see, you know that they're willing to make this sacrifice. It's a loss leader that's pulling people in. And it says something about member value in a way that, like, hey, don't worry about Costco, right? Costco's making money in other places. But if you're a member of Costco, you don't even question that they have your best interest at heart because of a few key items like the hot dog combos, like the rotisserie chickens, and like their pies. So another funny piece with Costco, when I was doing my episode on the behavioral economics of Costco, talking to a friend about it, and she said, well, all I know is it just takes five pies to justify your Costco membership. And so the val people make TikTok videos and now YouTube shorts and things about different things that you're saving so much money on at Costco that it pays for the membership in a very short period of time. One of them, and it's, you know, perfect with holidays here is those pies. So if you buy five Costco pies, apparently it ends up getting you the value if you get them there instead of elsewhere to justify the price of membership.

Wow. Okay, so I'm gonna go buy a few pies. This is great. This is so good. So good. And I, I see a question there from Mubina. I want to bring this in when we talk to the, the value portion too. So moving a shout out to Pakistan there, because sometimes. Let's bring the negotiation aspect to this because we're talking about how price is not always associated with value. A lot of times if you start off the negotiation, you give your price, you, you state your number. Sometimes the negotiator on the other side would respond with a value based argument. They might compare you to other people. They might say, well, your cost of goods are probably this, this is an exorbitant margin that you're trying to get when you're talking to somebody substantiating and validating your own price. How do you do that when somebody comes back with a value based argument?

And I think, you know, in this case, doesn't price reflect the value maybe? Right. They can go hand in hand. And sometimes people really miss the Mark, just. I'm not. When you were talking about negotiations, and I, for whatever reason, I'm thinking about negotiation of, you know, goods. If we're thinking about. We're. We're splitting up, right? And in this case, we think about a dog, we'll just go ahead and use this as the example, right? So you have a dog that you paid $300 for. We're gonna go. We say, you bought an expensive ish dog. Maybe it's $1,000 you paid for the dog. And then when it's time to split up and who gets the dog if it's saying, well, you get $1,000 and I get the dog, doesn't reflect, you know, the price of the dog is no longer relevant because that's not really the way that we think about valuing on that particular item. And, you know, you've heard about in divorce, right, where you may have people arguing over the value of their airline miles or something, and someone's going to pay some huge amount of money for them because of what it feels like they're worth, or they're giving up something that the other person doesn't necessarily value in the same way. So what I value and what's important to me doesn't necessarily matter to the other person in that, like, kind of negotiation aspect. That's getting more into what Kwame was saying. But the same thing holds when we think about pricing our goods and services. And ideally, our price is going to really hit that sweet spot of the value of the person that we are targeting and selling to that we're pricing at a point that's going to just perfectly be like, just under, you know, where their value is. If they value it here, we price it here, our costs are here, everybody wins, right? That's sort of the goal and the dream of where you'd want to be. We end up having a lot is like, they would actually value it here. If you talked about it properly. You're kind of talking about it like this. You've priced it sort of like that. And your costs are like, here. And then you have a whole sort of issue.

This, this is great. That's such a great example. Because value means different things for. To. To different people for different reasons. And as you start to negotiate more and have more of these conversations, you're going to start to become a lot more confident because you'll gather more information on the perception of value from other people. And I mean, I'm sure you've experienced this too. The, The. The value will change with Time as well. And so as you get, for instance, with the work that we do when we do speaking engagements, the, the price that we charged at the beginning of our careers is very different from the price that we're charging now. And the value is approximately the same. Of course, we've gotten a little bit better, but the fingers crossed, but we charge more because there's a, there's a brand tax now. So, hey, anybody who's thinking about bringing us in for speaking engagements, just remember, yesterday's price is not today's price.

I would also, I would argue the value has gone far up as we've done talks and things, you know, so I teach a class on creating better presentations. And as with anything after doing where people say, oh man, I wish I could, I'm not a good speaker, I, I'm not able to talk in the way that, you know, you do of whatever. And it's like, hey, if this is the first time you're doing this talk. Yeah, right. Like if you haven't done it before, it's not as, it's not just like it comes out, you know, of the box. Perfect. We've given these talks hundreds of times and I know my comedic timing on the joke. I know where to pause, I know how it's going to land. I know how this audience is going to react different than this one based on something that happened earlier in the presentation. It's a well oiled machine. It may feel off the cuff and a lot of it is in my case, but it's built on tons of experience. Like where they say, you know, van Gogh was, you know, sketching on a, a napkin or maybe it was Picasso someone, right, Must have been Picasso. But it was like sketch on a napkin. And then someone sees you in the restaurant doing it and then asks to buy it from you and they say, how much would it, you know, I'll give you five, you know, a fiver or whatever for it. And then he says, no, it's, you know, $100,000 or whatever. It's like, but it was just the thing, you were gonna throw it away anyway or whatever. It's like, well, yeah, it's, it's $5 plus like all these years of experience, right? Like my five minutes of a sketch is much more valuable because of, of those years of experience.

So I love that example. So good. And you know it was Picasso because Van Gogh wouldn't have been able to hear. So.

I know. And it's probably not even Picasso. So apologies for my, my totally butchering that story, which got weird in the.

The point still stands. We stand by it.

Valid.

This is good. This is good. And so let's go to Peter's question here. Can Molina discuss the perception of quality when the price is higher?

Yeah. So one, going back to the grilled cheese and where Kwame was saying, like when I anchored on how much does it cost for the materials, you say maybe you'd pay five or six dollars. And when I said it was 214, you go, I gotta try that thing. Right? It feels a little bit different. There's been research that when we believe that something is more clear, expensive, we enjoy it more. So, you know, if you're told that this is a glass of wine from a very expensive bottle, you know, this one's a hundred dollar bottle of wine and this one, you know, came from a box and you taste them both people prefer the more expensive wine and they'll say it's better and talk about all the notes and these sorts of things. Of course, it's all the same wine in both cases, but it feels different to people. And actually, you know, when they're in FMRI machines and things, their brain is lighting up differently because of that perception becoming our reality as we think about things. Similarly, when people are given a, you know, an aspirin and asked about how it's treating their pain, if they were told that in one case it was $2.50 a pill, and in the other case it's 10 cents again, people said that they felt more pain relief on the more expensive, expensive one than they did with the other. And they were, you know, receiving electric shocks at the time. So they were actually experiencing some pain in this. And so that perception becoming reality and the way we think about brands, actually. And so shout out again to my friend Matt Johnson, in case you're still here, in one of his amazing books in Blindsight, talking about, you know, if I believe that the Nikes make me jump higher and run faster, who's to say that they don't, right? So there's this interesting synergy and apologies if I paraphrase that wrong there, Matt, but when we look at this, the way we interact with brands and how they impact us, it's this really cool synergy. And so more expensive things were bought in more. It definitely changes that perception.

This is great. And as my, my undergrad degree was in psychology, and so that's my first academic love. And I, I found out that the, my favorite psychological studies involved people getting shock or shocked or people thinking that people were getting shocked.

So, you know, that's, that's how, how it rolls, I guess.

Yeah, it was great. And so let's get Jennifer's comment up here. Once you've gone through the, gone through the work, what is the best way to determine the performance of your pricing?

Yes, so, and I know I, I saw, I have at least a couple of current and former students that are in the, that have been here live. And thank you for that. And so you'll know that the thing I'm going to say here, and you can, you know, potentially be saying it with me where you are, is that it depends, you know, in this case, and that being said, I won't just leave you hanging with only and it depends, you know, a thing to be able to see is if you're looking at opportunities to sell, like, so it depends on what your goals are, what you're trying to achieve and how you want to be selling. And also a baseline of where you're coming from and what are norms, you know, and standards in your industry. Some of those things can all come into play. But let's say you are having a really hard time selling over the phone and you know that it's best to pitch in this way. But people are always asking you for discounts and you feel the need to negotiate down or to give discounts, even sometimes when people don't ask. And so if you're just able to say the price in a way that gets people to buy the thing you've been wanting to sell and they make the change and they start doing the thing that you wanted, I would say that is the best way to be gauging performance. So I have lots of examples in the book and multiple experiences with clients that I've worked with over the years. So, like, one person who does services and for one of her packages, you know, she'd been really struggling to sell an $8,000 package that she had that was this like, monthly kind of coaching services, and then looked at bundling some things together, created a high anchor of something that she wanted to sell. And I also give advice you want, you don't want. The thing you really want to sell shouldn't be the most expensive thing you're offering. So, but in this case, so she created a high anchor that she thought was going to make it so that that $8,000 package was more relatable. And so she created this $20,000 package that she wanted to sell and have that 8,000 thing, like I said, look really good. And in two calls back to back sales conversations. She didn't sell the $8,000 package. She had both people opt into the $20,000 package that she mentioned. And this is a piece of this, like pricing and value and what people care about. She thought that was going to help offset but like sold two twenty thousand dollar packages back to back where she was struggling to get people to buy in on the eight thousand dollar package. Another success for someone may be, man, all I can do, I only can convert when people talk to me on the phone. But I'm so sick of having call after call after call of pitching for sales. It would be great if people would just be able to buy online. And even if you think people can only buy from you, you know when you're talking to them, there are ways. And again, I've worked with clients on being able to look at what goes in a video that you're going to post. What are the things that you say on the phone? What are you picking up on to say, okay, this person goes in this category. This person's over here. They need to hear this. And when I know this, you, you can look at what you're intuiting and create it in a way that it makes it so someone does feel comfortable buying from you without having to speak with you or anyone on your team. And that could be a really big win for you. So identifying what your big goal is, where you're coming from, where you want to go, and if the change you're making is nudging you toward that new thing at a point where you've priced. So the thing that you're encouraging and nudging people to, to buy is something that's making you money and that they're happy with. Say that's the. I think someone did a chef's kiss in there somewhere. That's like the chef's kiss of the pricing life.

This is so good.

I've been.

This, I've never, I've never done this before. I've been send. I've been talking to my team on Slack. I'm like, everybody get this link. Listen to it now.

Yay.

We're implementing these strategies immediately. So good. So good. I, I love this. I love this. And you see you got a new fan of Jennifer. She's getting the book.

Thank you.

Great. This is really great. Molina. We, this, this time has flown by. I really appreciate this and I think the, the audience has spoken. We, we want more Molina. So this is great. So I can't wait for the next one. And just before you go just remind the listeners about the books, the the podcast and how they can get in touch with you.

You. Oh thank you. So as we said, I have written three books, the newest being the Truth about Pricing which is coming out January of 2024 but is on pre order already. I also wrote what your customer wants and can't tell you, what your employees need and can't tell you. And for everyone who is a fan of Negotiate anything and wanting to go learn more and check out the books, make sure they're a real fit for you. You can go to thebrainybusiness.com and you can read the first chapter of any of my books to make sure you're feeling good about them before you opt in and jump in for that. So the brainybusiness.com, best place to find me this ANI means you get free chapters of books and you can find me on all the socials as the brainy biz B I Z.

Awesome Melina, Another masterclass. Thanks so much for joining us today.

Of course, thanks for having me. And thanks everyone for joining. That was a lot of fun.

Congratulations. You've just joined an elite club by listening to a full episode. You're now officially, officially on the Negotiate Anything team. So welcome aboard. What most team members do is they subscribe to the podcast because that allows them to automatically get the latest episodes of the show. The best things in life lie on the other side of difficult conversations. Keep learning, keep practicing, and keep getting better. Your relationships will improve, your career will soar, and you'll have the confidence you need to get the most out of these crucial conversations. Again, thank you for joining the team. We're excited to have you and I will see you in the next episode. I'll catch you later.