The Magic Price Point

“OK,” he continued, “the issue here is that you’re not on our e-prom list, right?” I nodded. “And so you’re previewing a product based on marketing information that we’re giving to the media?”

I replied more happily than I should have: “Well, in part, yes. But we collect projector slides, sell sheets and press releases and read whatever we can about how the enthusiast media reacts to it and base a preview on that.”

He said, “So the first thing we’re going to do is get your editor, there, on our A-list – so that he gets e-proms and the marketing information that we only send to the most important media outlets.” (I’m back to beaming again.) “We can’t have you making purchasing recommendations that impact our sales without all of the information, can we?” (I agree enthusiastically.) “And the next thing we’re going to do is make sure our PR people visit your offices regularly, so that you’re in the loop. And I also want you to know that you can pick up the phone and call me anytime… really. I’m impressed with you and what you’ve done and I have the feeling that we’re going to be good friends for a very long time, Hal.”

Peter then went to stand up, but paused to ask if I had any questions. I asked how he felt the console war with Sega was going and he paused, thought contemplatively for a moment and said, “The magic number is one-hundred dollars. People will tell you that consumers aren’t that price sensitive and that the price point is rationalized by how great or amazing the product is, but they’re wrong. The value proposition is the key and we’d all rather spend less than spend more, right? Whichever of us can get there first will win,” he finished pointedly. 

Getting ready to stand up again, he said with a smile, “Anything else?” I opened up my media kit and asked him how many pages of ads he’d like to buy – which was met with another thunderous laugh. Smiling myself, I said, “Hey, you know that the buyers read and even trust our magazine already, so why not supplement this great editorial coverage with some ads?” He looked at me like a proud father and said, “You know what, Hal? You’re absolutely right, but we can't just start advertising in a brand new magazine that’s only a few issues old and has no other ads in it,” he stated while flipping casually through the latest issue. “But, I have to tell you, it was on every buyer’s desk. Every one. And one guy actually slid the magazine across the table at us, angry because he thought our sales guy was misleading him… So, you’re right, but let’s see how you do. Build up your product and keep working hard and we’ll be there to support you. You have my word.”

Finally standing up, he shook my hand, clapped me on the shoulder and said what a pleasure it was to meet me. He had a casual and confident aura about him that comes with age and experience, but in an endearing way. As he was leaving the room he turned around, looking over his glasses and said, “Remember what I said about the magic number, okay?” I nodded and sat back down.

Perrin strode in a few minutes later and said, “How did you think it went?” – still with that knowing gleam in her eye. I replied that I thought it went well and Peter seemed like a nice guy. Perrin smiled and nodded saying, “Well, he certainly likes you, Hal.” (I have to reach out to her and ask what the back story was, as there was clearly more to it.) I told her about the gist of the conversation while we walked to retrieve Matt from The Treehouse. She stopped when I got to the Magic Number part and asked, surprised, if he really told me that – in a clearly more-statement-than-question sort of way.

Peter was right: we remained friends for the rest of his career and he was a great mentor; I even flew out for his private retirement party. They did, eventually, begin advertising and supported the magazine from then on. And he was dead-on about the Magic Price and retail price points being important, even in the face of folks marginalizing it.