Internet marketing “experts” are fond of telling us about certain “systems” that work. They show us page after page of PayPal histories confirming that they have been paid tons of money for their work. And they tell us – “it’s easy” – all you have to do is follow their system.

The problem is they could make even more money; the “system” used by almost all Internet marketing gurus is badly flawed. Here’s why.

All the “top” Internet marketing experts will tell you that you need to add bonuses to your offerings. The idea is that a bonus will make it more likely that people will buy whatever you are selling. There is evidence to support this notion. People who try selling material without any kind of bonus find that as soon as they add in a bonus product – no matter how small and insignificant – they see a rise in sales. Indeed, bonuses do increase sales – there is no dispute on that.

However, an alternative “system” will result in increased sales, greater than those that can be achieved by bonuses alone. This method is based on the “fear of loss” syndrome and the associated “endowment effect“.

Imagine, for a moment, that you are thinking about buying a new computer and your budget is £500. The advert tells you all the things you need to know – but adds the fact that if you buy the computer today you’ll get a “bonus” of a free inkjet printer. Tempted? Maybe. But what if the advert sold you the computer AND printer for £500 but then said if you knock £35 off the price you’ll get the computer alone for the reduced price of £465. Still tempted? Probably less so.

Here’s why. When you are given a complete “package” deal you are then “endowed” with that product – you begin to attach yourself psychologically to the whole thing. Removing the printer from the package – even though you can save money – is not that attractive. “It’s only £35,” you say.

However, in the “bonus” example, you have not yet been “endowed” with the printer – you only get that if you spend £500 on the computer. In other words, the computer now seems more expensive than in the package deal – even though the price is the same for both items.

Plus, there is another issue. Taking away the printer from the package deal makes you feel as though you are losing something. Bonuses, on the other hand, don’t make you feel as though you are gaining. The fear of loss is more powerful than the attraction of gain. So having the option to remove something is an action we like less. Bonuses therefore have less appeal than a complete package of products that we can tailor to our own requirements.

So, what does this mean for Internet marketers? It means you will get more sales if you offer a package deal – with all your bonus products included. Then give people the option of REMOVING bonuses for a reduced price. People will be much less likely to do this because of the combination of the endowment effect and the fear of loss. In other words, don’t add bonuses; instead provide a package deal and then give people the chance to remove things from the package. You can price the package deal higher than the item plus free bonuses, people will be less inclinded to remove items from the package and your income will be greater than if you used bonuses alone.

Much of this theory is explained by social science expert, Barry Schwartz in his excellent book, The Paradox of Choice.