6 Pricing Strategies For Your Digital Product
When selling physical products, you have clear margins. You know how much it costs to physically create the project, and this makes it easier to choose a pricing strategy that brings in the most profit. With digital products, this isn’t as clear.
Digital products don’t come with the same manufacturing costs, shipping demands or extra fees. You don’t have to worry about where to store your products or how to quickly deliver them to customers. Sure, these products aren’t completely cost-free. You have to spend time developing them and creating them, and that might mean hiring experts to help you get the job done. You might also have to test them, which can take resources. Finally, you have marketing costs and transaction fees to consider as well.
That being said, it’s still tricky to price your digital product. Many new entrepreneurs make the mistake of thinking of these products the same as they would a physical one. Low prices potentially undervalue the product, and it sends a message to your customers that this isn’t worth the same as a physical product.
What’s the secret trick to landing the perfect price? Unfortunately, there isn’t one. It’s all about experimenting until you find something that works for your audience and your profit margin. Here are six pricing strategies to get you started.1. Know the value of your product.
As we said before, one of the risks of pricing your digital product too low is that it seems to lose in value. If you price solely based on your competitors, you’ll seem like you’re offering a lower-valued product. Ask yourself how valuable your product is to your customer. How much is your audience willing to pay for it?
This is most relevant if you’re selling something such as a course or an e-book. These products have value. They teach something your audience wants to know, and that has value. If you’re selling something that helps your user live better, make money or learn something new, those things have value.2. Try installments for larger prices.
Are you worried you’re pricing your product too high? It might help to consider allowing users to pay installments. This will help reframe the price so it doesn’t seem intimidating to customers. If customers are able to look at the price in a new way, it’s suddenly less intimidating.
For example, if you’re pricing a course at $300, that might seem like a lot. However, if you break it into $50 payments each month for six months, it’s much easier to swallow. If you break that down even more to a daily cost over a period of 12 months, it comes down to less than a dollar a day. Certainly, everyone can afford that, right?3. Think big.
If you’re not sure how to price your product, go big. It’s better to overprice than underprice when it comes to digital products. Remember, you aren’t trying to land the most sales. You’re trying to maximize your profits. You can sell 20 e-books for $5 each and make $100 or you can sell five e-books for $30 each and make $150. It’s all about psychology. People assume things that cost more have a higher value. You don’t want your customers to think your products don’t have any value, right?
As we’ve established, there is no cookie-cutter approach to pricing that works every time. Sometimes you might find you need different levels of pricing to address different types of customers. Adding tiers helps you sell to those who are willing to pay more for more value as well as those not sure they can afford your larger products.
Let’s go back to the e-book example. Your first tier can be just the e-book for $30, while the next tier includes the book and a helpful guide for $50. You’re likely to get more people to purchase both as the bundle than people to purchase them individually, and you effectively upsell for greater value.5. Try before they buy.
A lot of customers are afraid to risk their money over the Internet. They aren’t sure how useful your product is, and this keeps them held back. Offering a try-before-you-buy approach gives many customers the confidence to push through with the sale. You can include this in your invoice as a line in your terms or you can see it here in a template. Similarly, you can offer a seven-day or even 30-day money back guarantee.6. Include an added bonus.
Let’s face it: Everyone loves free things. With digital products, there’s a lot of room to include freebies. Adding a free e-book, workbook or video tutorial with each purchase can help people feel they’re getting an even greater value for their money. If customers are on the fence about their purchase, they’re more likely to go through with the transaction because they feel they’re getting something special out of it.
Pricing is an art form that isn’t easily mastered. As you can see, there are a lot of different methods of landing the sale, and they won’t all work for every digital product. Think about what your market is likely to respond to and start experimenting until you find a solution that works for your business.
About the Author
Wendy Dessler, from The Blog Frog, is a super-connector who helps businesses find their audience online through outreach, partnerships and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.