Let me ask you a question. How did you come to the price you charged for your last digital product?
At a guess, I’d probably say you looked at the competition to see what they were charging. While this is a good start, it’s far from the whole picture, and you’re really probably feeling a bit uncomfortable – like you’re fumbling in the dark.
Yes, if competition is the only factor in your pricing – this may get a bit uncomfortable.
While there is a hard number for handmade products – digital products are priced a lot differently. Think about it. with digital products, you have very little expense except for the time you put into creating it and any incidentals like software (or in my case, props for photos). In comparison, a handmade or physical product has real and tangible costs from the material you use to make it to the time you put in to make it, and then don’t forget about delivery, wholesale pricing strategies, your markup, and etc. This is not what we are talking about.
For the purpose of this discussion, we’re not talking about handmade products. Yeah, you probably can use some of these principles for handmade products, but these are really going to apply to you if you are a digital maker of info-products, eBooks, online courses, graphics, and etc.
So, if you make and sell something digital (or are thinking about doing it soon) – keep reading while I try and dispel some pricing myths and dig right down to the uncomfortable truths surrounding the pricing of your digital products.
(Keep in mind, I am sharing this out of love for fellow makers. I may share details about how I price products, but take my words with a grain of salt. I just want to ensure you get the most earnings from your next digital product launch because, at the end of the day, I live and breath to support the pursuit of personal creative power in life, and your success is a testament to my own creative success. So… on we go.)
Pricing Against Your Competition
Let us look at how you should price your products with regard to competition. The reason I want to talk about this first is simple. When you’re looking at pricing, the very first thing you’re likely to do is to say: “So, what is everyone else charging for similar products?”… And you may go from there.
Now there’s nothing wrong with doing this at all, but there’s more to think about, and a lot more questions to ask than a simple – “can I beat what they are charging?”
Double Your Price? (Our Case Study)
Your price doesn’t have to beat everyone else’s out there for you to ‘make the sale’. In fact, I’ve doubled my sales volume when I doubled my price.
Consider this personal case study: I previously launched our stock photo membership at $10 a month as my only offered price. We were making sales, but what ends up happening is that after a month or two, some people end up wanting to put $10 a month towards something else – and so they may cancel their membership. When I realized each member was good for anywhere from 3 – 6 months without canceling their membership, I decided to go from selling only $10 memberships (which is still an option) to offering and selling $30 and $82 memberships.
You see, I understand things change and people want to cancel, but consider that if someone was on my membership for 4 months at $10 a month – I would make $40. Great! But, what if I offered that same person an option to buy a year’s membership for $82? – would they do it and would they find value in it? The answer was YES. You see, the reason people cancel isn’t always because they don’t like the service. It’s usually that reoccurring cost. It bugs small business owners to see monthly fees. Plus, these other options were significant savings for them. If they know they’re going to need the service for a year – I increase my earnings up front. So, doubling my price really did work.
For some, $82 seems like a little and for others, it seems like a lot. In comparison to other stock photo sites, it’s probably average, but the point is – it’s a premium service that is being marketed and sold at a higher dollar but that ends up saving our members a good % of money and investment. So, comparing pricing to others isn’t the point. Sometimes, kicking your price up a notch to match your product and your audience’s expectations of a premium service can help you sell faster and profit even more.
Premium Products Sell at Premium Prices
If you have a great premium product, don’t be afraid to bump the price up. You do not, by any means, have to beat a competitor’s price to be competitive. In fact, by putting your price up, it’s quite possible that you’ll outsell your cheaper competition. Why? Because a higher price screams quality. There’s no reason to believe that you have to have the best price to make any sales. That’s just not true, you just have to have a really good system for capturing traffic, turning them into subscribers, build those relationships, and (of course) have a premium product.
If your price is too low, people start to wonder why
Let’s say you are a web developer who just started selling on Creative Market. If your brand spanking new WordPress template is really as good as you say it is, why does it only cost ten dollars? Rule number two – Never price yourself so low that you think people will look and think ‘wow that’s a quality sounding product, look how little it costs! ‘
That’s not what they’re saying at all. They’re saying:“Wow, look at how little that costs. It probably isn’t any good.”
So in effect, when you price according to the value of your product, you’re actually adding, even more, value through a higher price. It might be the same product with a new price, but it’s much more likely to sell at a reasonable price than a cheap one.
Don’t Be Afraid to Start High
A lot can be learned from pricing your products a little higher, and yet a lot can be lost when you don’t. So, don’t be afraid to start at the higher price because at least you’ve got somewhere to go. If you’re charging as little as possible, you have no room for sales, promotions, or making deals with affiliates, etc.
Too many people are afraid to take the leap and price their products as they believe they’re worth. Too many people look at the competition and think they have to cost less – otherwise, no one is going to buy their stuff, or they’ll make less money out of it. This is simply not true.
Don’t undervalue yourself just for the sake of being cheaper. If you have a better product, you put a higher price tag on it. The experimentation and playing around to find the right combination of offers, deals, follow-up and pricing options can come later.
Related Post: Tips for Planning Your Own Brand Photography
Presenting Choices in Your Pricing
We talked about it above but offering different price plans is a really good idea. Sure, you might change your price, put it up and down to experiment, put on offers and so on, but that’s not doing much if your original plan isn’t well thought out with a few different options to begin with.
Even with the simplest info products, you can present your buyers with options.
- Add a bonus
- Bundle it with something else
- Offer a structured pricing plan
For instance, maybe you have a high ticket item you can sell off in smaller chunks to be paid at extended periods. Or, maybe a low priced membership site that does the opposite, and offers a lump sum that gives access for three months, six months or even a year, like we do with our stock photo membership.
Remember that an important part of the sales process is all about answering the customer’s questions and putting them at ease. This means squashing their fears of any problems they may come up with in their minds for not buying your product. So, make sure you occasionally try different pricing options to help them make up their mind.
Reward existing customers with better pricing
It’s not hard to come up with ways to reward them. People who have supported your products and your business before with their money are the most important of all.
You’ve already got them on your lists, they’ve already bought your stuff, which means they’re willing to spend money, and of course, they trust you, and they’re serious about wanting more information, or the products and services you offer.
Remember this, because you want to keep the customers that are buying from you happy, and you want to stay in touch with them. How else can you improve if you are not listening to and rewarding those people who believe in you?
If you don’t go out of your way to please them, you’ll have to go out and spend more on getting new customers. Look after them, because they’ll be with you for a long time to come and will form the base of a successful business from the word go.
Don’t Do Free Trials
Avoid free trials. Trial periods are often a standard feature for a membership site, but unless you want to waste your time and resources on people who only want the freebies, set up a limited, less expensive trial for them. We recently set up a trial period for our stock photo membership and it’s honestly sold better than other options.
Even a dollar for the first month would be a good option if you run a membership site. If you don’t do a paid trial, you might find yourself wondering why your customers aren’t buying anything more from you. It’s likely because they didn’t want to buy in the first place.
Never Use the Word Cheap
Never tell anyone your product is cheap. Yuck. Nothing major to dwell on here, really, but never ever describe your products as cheap. Competitively priced – yes, the best price for that service or product – yes, cheap – no way. That just devalues your product completely. More often than not, people don’t want cheap. They want quality at a good price, especially in online business.
Experiment with Sales
Don’t be afraid to experiment with pricing strategies during holidays. I can understand how you might be worried that customers that bought your product at full price may be annoyed that they receive an e-mail for a special seasonal offer cutting that cost in half, but business just doesn’t work that way. You’re not offending anyone by doing a sale.
Related Post: 6 Steps to Make Your Own Stock Photos that Sell
Add Bonuses with Testimonials
Remember when coming up with a price for your product, don’t let your product be the only product. That sounds strange – I know – but look at it this way: What kind of things are going to allow you to increase your price and actually persuade people to buy your products?
The quality of your product and sales system are obvious, but how about bonuses? What about testimonials from known and trusted people in your field? It’s not just material things either. What about your reputation and how others perceive you? Here’s a final tidbit of advice for you. If you feel that your product isn’t worth the four hundred dollars you’re charging then increase its value through these various bonus methods. If you still don’t feel it’s worth it, then at this point, you know that you’re charging too much for it, and your data will tell you that too.
By now, you should have a clear idea how much you want to charge, and how you’re going to go about it. Understand that it’s not about being cheaper than anyone else, it’s about pricing your product correctly depending on competition, who you’re aiming your product at, its quality, and your ongoing tracking and testing.
Just remember, the price you put up there on launch day doesn’t have to be set in stone by any means. It’s there to be tinkered and played with by you until you feel it’s correct. Have a little confidence in your stuff. Next time you create that amazing digital product, try to avoid selling it at rock bottom prices because I assure you, it’s not gaining you sales – it’s quite the opposite.