Pricing your product or service can be extremely stressful.
There are business owners who are so good at marketing they can pretty much sell anything, at nearly any price they demand, but for the rest of us, pricing a product or service right is one of the hardest things to do.
So unless you have the marketing and positioning skills to command any price, this article will help you come up with a pricing strategy, especially if you're in the information product business.
Information products include all types of training materials; books, courses, seminars, and even coaching fit into this category of products. The criteria is really just that you're selling information.
The trick with pricing information is that it's based on the value your customers receive. If you print a piece of paper with a map showing where to find a bag of gold then that's worth a lot of money. It doesn't matter that the only tangible item is a piece of paper. If the gold's worth a million dollars, then that single sheet of paper is worth about a million dollars.
There are 3 main components you should consider when coming up with pricing strategies for information products. Here they are:
- You need to figure out how much the information is worth to your potential clients.
- You need to look at competitors and their price points.
- You need to consider how you're delivering the information. Different modes of delivery have different perceived prices.
It's this last component that I'll dive into the most in this article.
A paperback book off Amazon.com has one of the lowest perceived prices if you're just basing it on mode of delivery. Most paperback books sell for right around $10. Try to sell a paperbook book for $100 and you're going to have a problem with your business model.
Kindle books are all the rage right now. These also have a lower perceived value just based on the mode of delivery. People are used to buying Kindle books for even less than a paperback book. So if you want a higher price point, like $100 or more, then selling your information as a Kindle book is not the right way to go.
If you want to successfully charge higher prices for your information then you need to look at a different mode of delivery. The run-of-the-mill book that sells on Amazon.com or the local bookstore is not for you.
Moving up the scale a little, ebooks will sell for a higher price.
For an example of a successful ebook, let's take a look at TruthAboutAbs.com. It's an ebook, and the owner, Mike Geary has been selling his ebook for just under $50 for a long time. And he sells a lot.
According to an interview between Mike and Tim Ferris of the 4 hour work week Mike has earned nearly $1,000,000 per month offering his ebook (this was at the time of the interview, I have no idea if his earnings have gone up or down from there).
Here's a link to the full interview:
It's actually a great interview and well worth taking a few minutes to read.
There's just a short bit on pricing strategies, but Mike goes on to say he tested different price points, from $29.95 to $97.00. For his particular product, the $47 price point worked best (at least at the time the interview was done).
He says that's a good price point for fitness info products. And really, if you look over the products at Clickbank, which is the biggest online retailer of digital products, $47 seems to be a good price for pretty much any type of ebook.
The range is from about $27 up to $97 for ebooks on Clickbank. You'll see some priced higher and others priced lower, but that's a great starting range if you're considering offering an ebook.
I've seen business and marketing ebooks sell at a higher price (over $100), but really, if you're looking at higher target prices I think you'd be better off packing up the information as a multimedia product.
The thing with pricing is you have to make sure the mode of delivery fits.
Don't try to sell a $500 ebook.
If you want that price point you'll have an easier time packaging your information up into a full multimedia training course. If you want $2000 then you probably need to consider adding in an element of coaching or a seminar.
At the same time, don't underprice either.
You may not want to sell your ebook at a paperback or Kindle book price of $3.99.
If you want to offer coaching, don't do it for $47. That's not real believable. People are used to spending more money on ebooks so if you're offering yours for a really low price, they may immediately jump to the conclusion that your ebook is less valuable than one priced in the ‘normal' range.
The same with coaching. If they're used to seeing coaching for their issue priced at $250 an hour and you want to charge $47 for 5 hours a month, then of course you're sending up a red flag. You'd really need to overcome any objections your low price is going to throw out there.
So fit the model.
Look and see how the competition is packaging their material and what price point they're offering it.
You can sell easier at a higher price point in many markets by adding multimedia to your products.
Audio only products still sell well. People like to listen and learn as they're driving or exercising.
Video products do very well. You can either film yourself or use a screencapture software like Camtasia to produce videos. And then package it all up as a DVD or CD-Rom set or just offer it online.
You can sell multimedia products for a much higher price point than an ebook. Often multimedia products sell in the $100 to $1000 range.
Coaching is another way to get an even higher price for your products. Coaching is often available at an hourly rate or a bundle where maybe the client gets 1 month of coaching for $500 or above. Just be clear on how the coaching will be delivered. I've seen business coaching for $500 a month, but it's often just through email only. You definitely want to set boundaries with any product that includes an element of coaching.
At any rate, if you want to charge higher prices for your information, consider adding in these elements.
One thing I've done many times is go through several what I call ‘stages' with my products.
The first stage is a completed product that I price at a lower price. Then over time I add to the product and as I add to it I keep increasing the price.
If you use my stage model then you keep increasing the value of your product, the mode of delivery, and your price as you work toward making the best product possible. I went from a $200 product up to a $700 product doing exactly that over the span of a few years.
The nice thing is you'll have an information product to sell much sooner if you do it that way. Of course it needs to be a complete product, but you can always add more to it later on.
This helps you get it out sooner, which enables you to start helping people with your product sooner. And that's an important point to think about too.