"Hi Andrea, thanks for all your help with my new eBook. It's been awhile, but I think it's finally ready to go. Now, the million dollar question! ;-) How do I price it so people will buy it? I've asked around and it all seems so unclear...use a dart board?? You know what I mean. I want it not too high, not too low...just right. Signed, Goldilocks in Orlando."
Thanks 'Goldilocks', for your email and question. The issue of pricing is an ongoing one and as you seem to have discovered, doesn't really have a straightforward answer, unfortunately.
Well, okay, the simplest answer is the one above..."The right price is the price your market will buy."
However I have a feeling you are looking for more than that as an answer, so I'll try to to approach the question a little differently so you can get a more thorough idea.
Having helped price and sell many hundreds of different products for online sale in the last four years, here are the most important things to bear in mind:
(1) Ask yourself what the role your product plays within your business plan.
Is it a loss leader, a product that may not be very profitable in and of itself, but generates interest in your other offerings? (This is also sometimes referred to as a lead generation product.)
Is it a product you want to see a good profit on? Is it a product that naturally upsells clients into another one of your offerings?
The analogy of a restaurant can sometimes help. Ask, is the product in question a dessert or coffee? Is it the main course, or is it an appetizer? Maybe it is the equivalent of a sample or taste, like the pink spoon at a Baskin Robbin's Ice Cream Parlor?
By figuring out where your item fits into the bigger scheme of things, you will be able to make a strategic pricing decision.
(2) Be sure you are building a
full Product Funnel, with products and services for sale at each level.
What does this mean? The following diagram should help shed some light. (Excerpted from the forthcoming book "Multiple Streams of Coaching Income.") This shows the "Traditional Product Funnel."
Note: The product funnel model is based on real-world success, NOT theory.
Variations of this Traditional Product Funnel, built right, will ensure you have a variety of offerings at different price points. In some cases, you may find that you already have products at one level, and not at others. The smart thing in that case is to focus on fleshing out the missing levels. Often, an internet business that isn't doing that well in terms of gross income is creating too many little ticket items that sell at $50 or under.
Break free from this by determining to create something in the $100 or $200 range and increase your credibility and cash flow. Sometimes a bigger ticket item is simply an extended version of an existing product. It may be a multimedia version of an ebook. Or, it could be several smaller ticket items bundled together.
Note: As you create products for each level in the Product Funnel, you will need to build some structure to sell the higher priced items that don't naturally sell well in one step. The most effective of these can be complimentary TeleSeminars or Evergreen Autoresponders that you set and forget. (We'll talk about the latter more in the next Internet Biz Whiz lesson.)
(3) Research your market and test everything.
When it comes down to a solid answer to the pricing question, the best way to approach it is to test. If you can, poll your market for direct feedback as to what they feel they would pay for your product. When you first launch a new product, use 'beta' pricing or early-bird pricing so you can test how it does.
If you have a good value proposition on your hands, you'll find your early-bird pricing get snapped up, and you can raise your price after the initial sale.
If you don't sell well even with early-bird discounts, you must carefully reconsider and re-test the various elements of your product sales strategy including pricing, but extending also to your sales copy, the quality of your traffic, etc.
To do some research on what is being sold for what price online, check out these links to marketplaces online.
Bear in mind, your niche market may be willing to spend more or less money than others. So all your research needs to be taken in context. What is low pricing in a professional market may be very high pricing in a small business or hobby market.
Here are just a few market research links:
http://www.clickbank.com Clickbank is an online 'catalog' of digital products. You can research their listings to find out what other Internet Business owners like you are selling, at what prices.
http://www.paypal.com Paypals stores are also a great resource for calibrating what's being sold for how much.
And remember not to get discouraged by the fact that other people are selling things that may be similar to your offering. As I always say, there's a reason why when you go to the bookstore there are 11 versions of the Holy Bible for sale. Stay the course and focus on getting some ideas for pricing.
