What products and services sell best in a recession?

Hint: It’s not a trick question.

And yes, the answer is the one that immediately popped into your head when I asked you – and before you started over-analyzing the question…

The products and services that sell best in a recession are the cheaper ones.

That’s right: the ones that cost less and are more affordable.

I recently read in a biography of Milton Hershey that he believed his business was recession and depression-proof because he sold an affordable product.

He reasoned that, even if a person couldn’t afford new shoes or a new car or a vacation, they could always afford a nickel for a Hershey’s chocolate bar (which was the price in those days).

It turns out Milton Hershey was right.

According to an article in Ad News, when the economy turned sour in the fourth quarter of 2008, Hershey increased its advertising budget by 23%.

And as consumers switched from expensive premium chocolates they no longer felt they could afford to Hershey’s, the company’s net income for 4Q 2008 rose 51% to $82 million.

Similarly, while the restaurant business is in its worst slump since 1991, McDonald’s worldwide sales rose 7.1% in January 2009. Diners may not be able to afford caviar any more, but they can still afford a Big Mac.

I have found the same principle—consumer preference for lower-priced goods and services during an economic downturn—to hold true in the 2 little businesses I run: information marketing and freelance copywriting.

In my online publishing business, our low-priced products are e-books selling in the $19 to $49 range.

Our mid-range products are DVD and audio CD albums selling in the $100 to $150 range.

And our high-end products are multimedia programs selling in the $300 to $1,000 range.

In recent months, our customers are clearly telling us that (a) they are worried about money, (b) they really appreciate our reasonable prices, and (c) for now they prefer offers of low-priced products.

They want us to focus on offering products that sell for under $100, which seems to be the magic recession-proof price point for our market.

When we advertise midrange or high-priced products to our list, I get at least one e-mail from a reader telling me she wants to buy the product, but she can’t because she has lost her job—and a few others asking if they can break up the purchase into multiple small payments.

If you are an information marketer, I suggest that, rather than fight this trend, you accommodate your customers by:

1) Expanding your product line, especially in the lower-priced products like e-books.

2) Offering your readers more free content such as special reports and webinars.

3) Bundling products into packages that enable customers to get related materials at handsome discounts; e.g., buy 2 e-books, get the third free.

I am also finding that offering low-priced service options has kept my freelance copywriting business active and profitable.

To make $10,000 as a freelancer, you can either do one $10,000 project or five $2,000 projects.

These days, I am doing many more $2,000 projects for clients who want to continue their marketing but are focused on controlling costs.

For instance, we are saving my clients money by doing more marketing online and a bit less offline.

We are also using marketing methods that can be tested at minimal cost before rolling out the campaigns (e.g., small test mailings of 1,000 instead of 10,000).

One thing that has worked especially well is a new service bundle I call the “Starter Package“.

I added a button to the main menu of my copywriting website describing a new service I call the Starter Package.

Normally, I charge $500 an hour for consulting. With a 10-hour minimum, payable in full in advance, that works out to $5,000—affordable in normal times, not so affordable in an economic crisis.

With the Starter Package, I offer new clients 90 minutes of my time for a flat fee of $600—a discount of $150 off the regular rate.

I picked 90 minutes deliberately. Not only is it enough time to give prospects a taste of how my advice can benefit them. But it comes in at a price point under $1,000, which is within the comfort zone of a new client who doesn’t really know me all that well.

More important, the Starter Package shows prospects I empathize with their desire to cut back on spending and have designed a service to accommodate their smaller budgets.

Interestingly, what usually happens is that, after reviewing the Starter Package offer, prospects call me to get a quote for whatever it is they really want—and more often than not, buy it from me.

So while I don’t actually do a lot of consulting under the Starter Package arrangement, it makes prospects more comfortable with me as a vendor who respects their budget concerns and limitations.

Bob Bly is the author of “World’s Best Copywriting Secrets” and has written copy for more than 100 companies including IBM, Boardroom, Medical Economics and AT&T. He is the author of more than 75 books and a columnist for Target Marketing, Early To Rise and The Writer. McGraw-Hill calls him “America’s top copywriter”.

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