There is a vital lesson buried in the August 19, 2009 Jet Blue announcement that they were suspending sales of the $599.00 “All You Can Jet” promotion they’d debuted only seven days before. Any student of Behavioral Economics could have predicted that an “all you can eat” approach would inspire vastly different behavior than if Jet Blue had charged a lower fixed fee plus $1 per mile. Similarly, over a decade ago when AOL switched to a usage-independent flat price, connection time increased four times more than they anticipated.

“All you can eat” is an entirely different price than “very, very cheap.”

Traditional economics says that lowering the marginal price from $2 to $1 should have a similar effect to lowering it from $1 to $0 — but experience and experiments have both shown that the traditional demand curve acts in an odd manner when we reach $0 marginal cost. Jet Blue’s executives should have known better. But the Jet Blue management team is not alone.

Many executives assume their customers are more rational than they really are. For example, most leaders believe in enhancing the options given to customers, but increased choice can actually freeze decision-making by overwhelming the shopper. Excessive options is a key reason that an average of 60% of all online shoppers abandon their purchases mid-stream.

Last month, we released an Assessment and Reflection Report authored by Beth Kanter and Allison Fine on America’s Giving Challenge, a program we launched in order to test and encourage the power of individual giving online. As part of this report, Beth and Allison featured three case studies on organizations that were successful in mobilizing their supporters during the Challenge. The case studies are based on interviews with remarkable individuals leading their Challenge efforts and winning $50,000 each for their causes.

When it comes to direct mail, success can be measured in a variety of ways besides straight ROI — although raising response is, of course, the bottom line. For instance, did the piece grab attention? Did its design help it get past the gatekeepers? Or, was the mailing particularly cost-efficient? Did it help increase customer loyalty? These are the factors that came into play for the following three successful direct mail campaigns.

A nonprofit’s website needs to make it easy to find out more about their cause, to donate money, and to become more involved. It needs to make it easy for media contacts to find the information they need and the contact information of key personnel. And it needs to do all this in a way that’s inviting to the organization’s targeted donors and/or volunteers.

I recently received an e-mail that had me riveted from start to finish. It contained a true story about two men aboard US Airways flight 1549—the one that crash-landed into the Hudson River. Both passengers had regularly backed up their critical computer data. One did this by transferring info from his hard drive to a second computer, but he had taken both laptops on the plane. The other passenger had used an online backup service called Mozy (owned by EMC)…

For local and small businesses, high-production quality does not bring the customers (in fact high-production quality is as likely to alienate customers!). Traditional videographers will sniff at this, but it’s simple, down to earth production where your prospects can really see you that has the greatest impact. What you should be aiming for is a “good, but not too polished” result. As soon as it gets too polished you lose that personal connection with people and they’ll see it as just advertising.

If sales are hemorrhaging or customers are flocking to dealmaking competitors, discounting might be necessary. But chopping prices is not without risks, including a cheapened brand image and customers who will never pay full price again. And if there’s no demand, even signs that scream “Lowest Price Ever!” won’t draw customers. “The primary factor that determines the price you’re going to get is what the demand is,” says Roland Rust. “In a situation where people want things less, the price has to be right.”

As the economy began to deteriorate in early 2008, a few things became clear to Gary Gottenbusch, owner of Servatii Pastry Shop & Deli Inc. in Cincinnati: Customers were purchasing smaller items in an effort to be frugal, and soaring prices for flour and other commodities were threatening to eat into his profits. A trained baker whose family has been in the bakery business for decades, Mr. Gottenbusch knew the danger the situation posed to his small business…