How Do You Decide on Product Pricing?

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Pricing is always an issue that people worry about. That applies to your own products and – as you’ll see a bit later – the products you promote.

And pricing is a minefield.

There’s no correct answer about the price you should charge for the products you create – in the offline world it’s just as chaotic.

For instance, I buy my mum’s groceries so I end up knowing more about some prices than I’d like to know. One of her favourites is instant porage oats with golden syrup and I can buy the box of sachets in my local supermarket for £2.58 or I can get the identical box in a local pound store for £1. That’s a two and a half times price difference for the exact same product bought in a different shop.

Translated to a $10 internet marketing product that would mean $25 in the right location.

The shoppers in the supermarket are happy to pay the higher price and the same goes with online prices.

I’ve not done a precise survey but my gut reaction is that JVZoo seems to sell higher priced products than Warrior Plus. And Clickbank is higher still.

When he was alive, Gary Halbert famously said:

“What advantage do you want?” they ask.

“The only advantage I want,” I reply, “is A STARVING CROWD!”

You can read the whole of that particular article here. It holds just as true now as when he wrote it back in 1984.

And it affects the price you can charge.

If there’s a crowd of willing (starving) buyers you’ll get more money than if they’ve just eaten or if they’re only feeling peckish.

The copy you write plays a part in creating your starving crowd – that’s one of the reasons so many products (not just internet marketing ones) are laden with hype, images of success and promises of as close to instant results as it’s possible to make without falling too foul of legislation.

And – like the porage oats – there’s no reason to keep to one price.

Experiment.

You may make more sales at a lower price but more overall profit at a higher price even though you sell less units.

100 sales at $7 would bring in $700.

50 sales at $17 would bring in $850.

25 sales at $27 would bring in $675.

10 sales at $97 would bring in $970.

So if that was the case (and you won’t know without testing) then 10 sales would be the sweet spot to maximise income on the front end.

Then it starts to get complicated.

You’d have a different number of buyers on your list if those figures held true at the various price points.

And buyers lists are valuable – they’ve proven that they can and do spend money. They’re more likely to spend money again on your next product or promotion than people who are more interested in getting freebies.

So you may decide to home in on a lower price “tripwire” product in order to get more buyers on your list.

Or you may decide that you’d prefer people who aren’t just on the adrenaline rush of $7 products and that you’d prefer the lower number of sales at the higher price point.

You might even decide that you’re going to price the product even higher – maybe $297 – and promote it via a webinar.

Could it be the same product at all those different price points?

Probably.

You’d maybe need to add a Skype call or a personal consultation or ongoing support at the really high price but I’ve seen cheap $7 products offer almost the same as much higher price products.

Some of it is down to how comfortable you are with the price you’re charging.

And some of it is down to the expectation of your buyers.

I’d wager that the people paying $297 will get better results than the people paying $7 for near enough the same product.

Why?

Because they have a higher perception of the value of the product.

That’s one of the short cuts we use (check out Robert Cialdini’s book Influence for more detail) because life’s too short to evaluate everything before we purchase, even if it was possible to do that.

All of which is a long way of saying that pricing products is inspired guesswork.

The same goes for products you promote.

I promote a number of different binaural beats meditation products in the self help arena.

They all basically do the same thing: change you brain’s state to one of deep meditation whilst playing a track of rainfall or other natural sounds.

The most recently launched product takes 12 minutes per session and typically costs $47 so long as people take the almost-perpetual “early” discount.

The next most recently launched (from the same company) takes 30 minutes per session and costs $297.

The one I use (because the others above weren’t available when I bought it) costs around $100 depending on whether or not you get just the downloads or the CDs as well. The sessions last an hour.

And the grand-daddy of them all costs an order of magnitude more (hundreds of dollars per level and takes years to complete versus weeks or months for the other products). It is personalised once you get beyond the first level and there are upsells to go on retreats so it could easily cost thousands. It still sells and people swear by it – probably because at that price point, they’re more likely to use it.

But the results are essentially the same, even on the cheapest level.

As an affiliate, I make the most money most months from the cheapest product but occasionally one person buys the $297 alternative and the 50% commission dwarfs the cheaper product with just one sale.

Unfortunately, that doesn’t happen every week or month but when it does, it’s a nice feeling.

The nice part about this is that you can make a comparison page (which is what I’ve done) and get both ends of the market.

You could equally create pages promoting each different product. That would work and you could almost certainly do it on the same site as the one with the comparison pages.

Experimenting will help you work out which pricing option works for you.

My previous background was retail and typically lower price, higher volume products and that’s where my comfort zone still lies.

Yours may well be different.

Some affiliate marketers I know only promote high ticket items – even as their first sale to people – and manage to earn a very nice living from that.

Others prefer quantity of sales.

Both work.

Which I guess means that pricing comes down to testing and inspired guesswork. Which reminds me of a web designer I met who, when asked how much a website would cost said “as much as a car”.

It’s down to personality and comfort as much as anything else.

But, of course, you won’t know until you actually test it for yourself!

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