Product Pricing Basics
One of the things I struggled with when I first got into information marketing was how to price my product. At first I just picked a number out of thin air and said to myself, “I think that’s fair.” Duh! What was I thinking? Not a very scientific or even common sense approach. You can probably guess, I did not make as many sales as I might have once I learned how to come up with a price.
So here is what I do now to price a product that is ready for market. The method I am going to describe right now is for a product that has competition and is not unique to the market. The first thing I do is research and see what other people are selling similar products for. I go to places like Clickbank, PayDotCom, and I use the major search engines and search to see what I come up with. I like to keep a little spreadsheet and note the name of the product, the URL, the price, and size of the book or report and any similarities or differences that should be noted.
Once I have done that research it’s time to come up with my unique selling proposition (USP). Basically this means I need to figure out how I am going to make my product stand out against the competition. If the products I found are all similar in size and price I have a couple of options. One is to go back and add more features and benefits to my product so that I can simply outclass my competition and charge more money. I could also go the other direction and try to sell my similar product for less money than the competition. I rarely use this tactic as I need to get more market share to make the same money and I simply don’t like price wars. No one really ends up winning.
A final option is to price it the same as everyone else. This still leaves you in a position to persuade your prospect to buy your product rather than your competitor’s. This can be done with bonuses (PLR books and reports are what I use) but generally I almost always go for a better quality, higher perceived value and price it higher.
You are always going to have two kinds of buyers. Those who want higher quality and those who want basement prices. For those who are bargain basement shoppers I normally create smaller reports that are packed full of solid information and are well within their price range. This does two things. First it allows me to sell to both markets. The small reports to the bargain hunters and the high end books to those looking for value and quality. The second benefit is that it allows me to introduce the quality and value to the lower end market and move them into the higher end products in the future.
Pricing is a process that takes some testing. It is not an exact science. Often times I will do split testing of my sales page on price alone and see what price point gives me the best ROI. The more products you create the better you get at closing in on your best price point.
Do you have any tips or ideas on how you price products? Please feel free to comment below.
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