This repricing case study analyzes when Cards Against Humanity raised its price on Black Friday and counterintuitively boosted sales. Read on for the shocking specifics!
In this internet-dominated age, competition is fierce across all businesses and industries. Within ecommerce especially, the margin for error is minuscule, with all parties following the same basic set of rules:
→ keep prices low
→ advertise often
→ stay engaged
Seems safe enough, right?
But not everyone in ecommerce is interested in playing by the unofficial rules.
In fact, one company was willing to risk sales — and the respect of Amazon — on one of the biggest shopping days of the year with an unheard-of marketing tactic.
How Cards Against Humanity risked Black Friday sales all for the sake of…a joke?
You heard that right:
Cards Against Humanity, the self-proclaimed “party game for horrible people,” decided to break all the traditional Black Friday sales rules in 2013.
And the results of this tactic are nothing short of shocking.
Here’s what the company did with its signature game that happens to be the best-selling game on Amazon:
It raised the price from the usual $25 to $30 on Black Friday — broken rule number one.
“Anyone can do a sale for Black Friday,” recalled Cards Against Humanity co-founder Max Temkin. “But nobody but us could get away with raising their prices and risking a ton of sales just to make a joke.”
The game in question involves one player picking a black card with a random (and usually hysterically inappropriate) question or fill-in-the-blank sentence.
Remaining players must come up with the funniest response to the black card’s prompt by picking from the set of white cards they are dealt. (White cards are replaced as they are used, so players always have the same amount to choose from each hand.)
While Temkin runs a serious business, his company clearly doesn’t take itself too seriously — hence the lighthearted marketing strategy.
Playful about promotions, serious about sales (and profits)
Even the most fun-loving companies are still concerned with their bottom line.
So, what motivated Cards Against Humanity to make customers pay more for its product?
According to Temkin, it was a lack of marketing throughout the year — broken rule number two — and the desire to stand out this holiday season.
“This is a difficult time of year for us because we spend almost no money on marketing, and it’s easy for us to get lost in the noise and money of the holiday season,” explained Temkin.
And why a 20% increase of $5?
“We initially started talking about doing a Black Friday sale over the summer and came up with the idea of a ‘$0.01 off’ coupon. I liked the idea,” says Temkin, “but have always maintained a policy of no deals, no discounts, and no sales for Cards Against Humanity.”
Temkin continued: “After some discussion, Ben [Ben Hantoot, Cards Against Humanity co-founder] came up with the idea of raising the price for Black Friday and that was so outrageous that I fell in love with it instantly.”
The co-founder believed the counterintuitive deal fell perfectly in line with the sense of humor of the game’s fan base.
But, what did Amazon, the game’s primary retailer, think of the idea?
“We called our contact at Amazon and explained the idea for the sale to them. They thought it was funny but were also pretty annoyed — apparently monkeying with pricing on the biggest sales day of the year isn’t as funny to Amazon as it is to us.”
Reinventing the idea of price elasticity of demand
As we were talking about this around the office earlier this week, I immediately began thinking about price elasticity of demand and how the recent Cards Against Humanity marketing scheme played into it.
The formula for price elasticity of demand is as follows:
Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price)
In other words, a product’s price change can affect whether or not people will buy it.
The concept is simple, but what takes place in reality is a bit more complex.
In theory, there are two kinds of products and services that result from the formula: elastic and inelastic.
Inelastic products and services are more resistant to changes in demand when their prices fluctuate. Think gasoline for your car and heat for your home.
Elastic products and services have the opposite effect, and the demand for them correlates to the price change. For example, if prices at your favorite restaurant go up you’re likely to find another place to eat, or if a clothing store has a sale more people are likely to shop there.
The results from Temkin’s marketing ploy defy the logic behind price elasticity of demand.
On a day like Black Friday, where consumers are looking to pay the lowest price possible for the goods they want, people paid more for Cards Against Humanity — reclassifying what should be an elastic product as inelastic.
In fact, Temkin confirms the company sold even more games than last year’s Black Friday and managed to keep its spot as the top-selling game on Amazon despite the price hike.
Why would people knowingly pay more for a product they know they can get for less?
The answer is the gimmick.
Marketing gimmicks can help you sell at higher prices
Temkin and Hantoot’s product boasts a playful reputation that people want to be associated with.
It’s the same reason some people buy Ben & Jerry’s ice cream over other brands. They’d rather pay up to $6 for a pint of a flavor called Chunky Monkey or Schweddy Balls because they like the names and the company behind them.
In 2009, Starbucks announced they would be increasing their drink prices by up to 8 percent. This would drive most coffee companies — or any company — into the ground, but not Starbucks. The company reported a 21% increase in sales at the end of fiscal 2009.
But what if that sometimes means raising prices?
On Black Friday, the consumer need to shop is heightened, so it’s an ideal time to raise prices. That’s a repricing strategy in itself, and it works on other major shopping days throughout the year.
But other kinds of repricing strategies may warrant a price increase as well.
As an online seller, ask yourself the following questions:
→ What kind of gimmick or trendy reputation can I create for my products through marketing?
→ Do my products serve a niche market?
→ Do my products have any kind of uniqueness or exclusivity?
→ How can I market my products to give the impression of exclusivity or serving a niche market?
Remember, it’s not the products themselves that warrant a price increase (a party game, ice cream and coffee); it’s the persona and marketing created by the company behind the product.