This transcript was generated from the episode audio and may contain minor errors.
[Music]
What if you could sell a coupon book for $100 when everyone else, all your competitors are charging $25 and customers would actually thank you for it. I love this story. I love it so much. The premium pricing paradox. That's exactly what Scott McMurren and his partner Gary accomplished with their Alaska tour saber books, proving that premium pricing in fact can work even in the discount business.
Just kind of proves a lot of things wrong. These guys built a whole business out of this concept. I first wrote about it long ago in the $100 startup and Scott has been a friend of mine for many years. The guy I'm gonna tell you about, I think the business is still going strong. So I'll mention that a little bit at the end as well.
But first let's talk about how this actually came to be. In this segment, it's all about helping you learn the key steps to a new side hustle, one step or concept per week. It includes activities, examples and of course it's all free, just like everything that we do. We are using the book "Side Hustle" from idea to income in 27 days as our text. All right, so for the first half of the year, we went through the 27 steps in that book.
Now in the second half, we're looking at these detailed case studies so you can understand how people apply the framework. And the starting point is Scott McMurren, this guy in Anchorage, Alaska, he's working in media sales at a TV station and his friend Gary keeps pushing this business idea. Alaska, the state attracts over 1 million visitors annually, many of whom plan their own trips rather than joining cruise ships or guided tours. It's a very independent minded state. I respect that.
And these independent travelers faced a consistent problem. Alaska is expensive. Alaska is just pricey. Everything costs more than in the lower 48 states. Tourism companies often charge premium prices to visitors.
The running joke was, welcome to Alaska, please hand over your wallet. Now, Gary's idea was to create coupon books and Scott initially resisted that idea, but the combination of Gary's persistence, Scott's growing fatigue with his day job eventually went out. So they decided to move forward and they had this crucial insight that would define their success. Instead of following the typical coupon book model, which is basically low prices supported by advertising revenue, Scott and Gary chose a radically different approach. They would create genuinely valuable offers and charge premium prices for access to them.
So these target offers, it wasn't just like 10% off your next purchase, which is hardly a promotion or hardly a savings. That's something that helps the business. It doesn't help the customer. Their offers were things like two-for-one deals on helicopter tours that would be hundreds of dollars each, free second nights at hotels, similar high value opportunities. As I said, not the typical offers or discounts.
And their pricing strategy was equally bold. Comparable products sold at $20 or $25 and Scott and Gary set their price at $99.95, which is, let's just say $100. That's easier to say, $100, four times the typical market rate. They positioned the offer with clarity that made the value undeniable. The pitch was buy this coupon book, use it once, get your money back.
Then you have more than a hundred other uses as a bonus. This framing transformed the purchase decision. Instead of asking, is this coupon book really worth $100? Customers ask, would I use at least one of these offers during my Alaska vacation? And for travelers already spending thousands on their trips, the answer was obvious.
All right, let's take a quick break. When we return, a bit more about the business and also how you could apply this premium pricing paradox to other markets. 'Cause there's something out there you can do too. All right, I'll be right back. [Music]
Scott's media sales background proved invaluable for recruiting participating businesses.
He understood how to present win-win partnerships rather than simple advertising requests. His approach leveraged competitive psychology. When businesses hesitated to offer substantial discounts, Scott pointed out other companies that were already participating. The implied message was, everybody else is doing this. You don't wanna be left out.
And this strategy created momentum. Each new participant made it easier to recruit the next one as businesses feared missing out on the customer traffic their competitors would receive. Then charging $100 instead of $20 created an unexpected benefit, better customers. People willing to invest $100 in a coupon book were serious about using it and generally more pleasant to work with. This customer quality advantage extended beyond just the book buyers.
The participating businesses reported that TourSaver customers were typically more engaged, better prepared and more appreciative than average tourists. So it's a win-win all around. And I think it's been what, 15 years, maybe more than that now, it just goes on and on. TourSaver has remained Scott and Gary's primary business and income source. They're both involved in lots of other businesses as well but this model has proved sustainable because it created genuine value for all parties.
The tourists save substantial money. The businesses gained quality customers. Scott and Gary built a profitable operation. It has survived economic downturns, increased competition and industry changes because the core value proposition remained compelling. So when your product can legitimately claim to pay for itself with a single use, market conditions become less critical.
The TourSaver story demonstrates customers don't always want the cheapest option, they want the best value. By packaging genuinely valuable offers and pricing them appropriately, Scott and Gary created a premium product in a discount world. And what about you? What could you do? What could you do in another industry?
This strategy works across a lot of different categories. The key is ensuring your offer delivers value that significantly exceeds the price paid. Customers need to be able to see the return on their investment. And then they can pay higher prices happily. Higher prices often increase rather than decrease sales.
This is something that a lot of new business owners do not understand. And it's so important to creating sustainability, viability, feasibility, long-term endurance, all those good things in your business. So you can do something like this. The lesson isn't to charge more for the same thing, it's to deliver so much value that the higher price feels like an obvious bargain. And when you can make that work, you're gonna discover that premium customers often make better customers too.
I'll leave you with that today. Thanks for tuning in. As always, it's better to have a simple idea you can start right away than a brilliant idea that never launches. Thanks for tuning in today. My name's Chris Guillebeau.
This is "Side Hustle School." [Music]
from the Onward Project.
