12 min read
For everyone out there making money off your blog, I’m sure one of the biggest challenges you’ve faced is your product pricing strategy.
It’s difficult to know what value can be placed on a product whether it’s digital or physical and there is so much to take into consideration before you make your final decision. It can either stop you in your tracks or leave you cycling through pricing theories until you’ve completely lost your mind.
Do you anchor your pricing? Do you compare your pricing to your competitors? Or does the Power of Nine really have all the power?
Before you know you it, you’ve questioned yourself into a corner and pushed your launch back four months.
But here’s a big secret: No one actually knows the true value of anything. There are no Better Business Bureau guides that say all online courses should be priced at $X. And there’s no way to really compare prices of what you’ve created with what someone else has created. Once that starts it just becomes a race to the bottom to price your product low enough to beat the competition. You, your product, and your audience deserve better than that.
The problem with product pricing is that it doesn’t exist in a vacuum. You can’t just look at an eBook and say, “Thou shalt cost $14.50” and it’s done. Well, you could, but that’s probably not the wisest marketing strategy.
Now I’m going to say something a little crazy– What price you set for your product doesn’t matter. All that matters is that you price it.
I know that might sound like it has no base in reality, but let me explain. Focusing your efforts on pricing upfront can cause some roadblocks and misdirected values. Like I said earlier, you might keep pushing off your launch because you’re worried you aren’t pricing your product correctly. You’ll also be putting too much emphasis on your bottom line instead of creating value for your customers.
Creating revenue isn’t in and of itself a bad thing. It’s absolutely integral to building a successful business. But when you’re solely focused on making the big dollar signs, you’re missing out on why your business should exist. You should be teaching everything you know and should be creating value for your customer. It should be about creating an experience that brings your customers back for more time and time again.
You need to take your mind off your price tags and put it on the experiences your customer goes through to find, learn about, and purchase your product.
The girls at Think Creative Collective say it best so I’m just going to pull straight from them:
We learned very early on that the actual number behind what we offered (whether it was photography session, canvases, logo designs, or branding) was the lowest thing on the list of concerns for our buyer. So we put our focus elsewhere.
- You’re less stressed about your product selling
- You focus on adding value to your offer
- You attract the right people who are so ready to buy what you’re selling
- You launch things quicker and with more confidence
Doesn’t that sound freeing? Abagail and Emylee really have it figured out. Once they were able to step away from the pressure of perfectly pricing their products, they learned they could spend more time on what really matters– the customer experience.
You might be asking yourself, “So if the price doesn’t matter, what am I supposed to do? Should I just give it all away for free?”
I’m all about freebies as incentives and sneak peeks. But if you’re wanting to create a sense of value around your course, please put some dollar signs in front of it. It’s like when you give a course away for free, you might think you’re being altruistic, but in all reality you’re telling your audience that your course isn’t worth their time or that it has no value. By giving it a price tag, you’re automatically proving it has value.
In other words: It’s not about what you price your product, it’s about how your customer perceives it.
People buy because of how they feel and that’s what you should be selling– the feeling, the experience, and the results for your customer. When you focus on your customer’s perceived value of your product, you’re automatically going to direct your efforts into creating an experience they will enjoy and want to recreate.
Val talked with the Think Creative Girls on Ep 14 of our podcast, Reach, to hear more about their “the price doesn’t matter” stance. What they said was mind blowing.
“Sometimes you just have to talk about your product differently to make sales go up. We’ve seen our $300 course do better if we’ve simply changed the sales page or changed the pitch. Not anything about what’s in the program or the price, but just how we talk about the course, how we’re attracting our audience, or how we’re education them about the product.
We like to tell our people that the last thing you should change about what you’re trying to sell is the price. Change or tweak everything else before you get to that.”
Are you making it clear to your customers how your product will help them solve their pain points?
Are you explaining your product in a way that everyone can understand?
Are you making the purchase process an effortless journey through your sales funnel?
These questions will dramatically change how your customers see the value in your product. If they can’t read your fragmented sales page and if they don’t even understand what your product is or how it will take them to the next level, no price on Earth will get them to hit the purchase button. But if you can show them how their life will change by using your product and make the process of buying it seamless, you’ll be sure to have your repeat customers.
While I’ve told you not to worry about pricing your product, the fact of the matter is, you still need to do it. If you want a successful online business, you need to create products and services and sell them. So, if you’re in the same boat as many bloggers out there, wondering how to put a price tag on their newborn baby products, here are a couple perceived value pricing strategies to think about.
The Pay What You Want (PWYW) strategy is obviously when buyers pay the amount they want for your product. In some cases, bloggers will set a minimum price, and/or a suggested price as a guide for the buyer.
One word of caution– sometimes PWYW ends up being that your customer pays zero dollars, so this strategy is a bit of a risk, but definitely has some pros.
Pay What You Want can help you grow your list. Put that product behind an opt-in form on a landing page or website to help grow your list. This is a must if you’re giving your audience the chance to get your product for free. You’ve got to make sure it’s worth your time if you’re not getting paid for it. Also, if you are giving them a free option, I would suggest putting up a time limit up. A little scarcity is always a good idea.
Some people will pay more than what you expect. You might be surprised to hear that if you give people the opportunity to give you more, they actually will. Ryan Delk of Gumroad has seen it happen over and over again with vendors on his site. In an interview he did with Tom Morkes, Delk shared a little of what he’s seen.
“The interesting thing about Pay What You Want is that people fundamentally underestimate how engaged and excited the top 1 to 3% of their audience is about the things that they do…
So what we’ve seen is that when someone releases a PWYW product, the average price paid…will increase pretty dramatically. There are a couple products that started at $3 and when they went to $1+ (Pay What You Want anything over $1), the average price paid went up to almost $5. So that’s about a 60% increase in the average price paid (which is also equal to total revenue) …
We’ve seen in a lot of cases where the average price paid goes up significantly after switching to PWYW because you’re letting people value the product for themselves.”
You see how that perceived value really kicks in here? If you do your job at talking up the results, explaining it well, and making it easy to get, your customers will see the value in your product and it will absolutely pay off.
Jason Zook is known for some wacky stuff. He’s let companies buy him for a day to wear their branded t-shirts, he sold his last name, and he even sold his future for a while. He seems to always have something interesting up his sleeve and his price bump strategy was no exception.
The Bumpsale method bumps up your product’s price after every purchase. For his initial experiment, the price went up $1 each time some made a purchase. So if you’re a customer seeing this happen, you realize that the longer you wait, the more the price is going to increase. It’s really an amazing experiment in scarcity. If you’re on the product’s landing page and seeing the price bumping in front of your eyes. Zook eventually created a tool for anyone to use his method at bumpsale.co.
In this case, the perceived value comes from other customer’s buy in. If you’re on the product’s landing page and seeing the price bumping in front of your eyes, what are you going to think? Most likely you’re going to believe that other people are finding value in it and you’re going to buy in as well.
In his book Priceless: The Myth of Fair Value, author William Poundstone shares one of the most famous pricing experiments. In it he shows that an audience will believe a price is perceived reasonable when put compared with higher and lower priced items. It’s a long explanation, so I’m just going to pull directly from an article ConvertKit founder Nathan Barry wrote about it.
People were offered two kinds of beer: premium beer for $2.50 and bargain beer for $1.80. Around 80% chose the more expensive beer.
Now a third beer was introduced, a super bargain beer for $1.60, in addition to the previous two. Now 80% bought the $1.80 beer and the rest $2.50 beer. Nobody bought the cheapest option.
Huh, that’s actually not good. The seller actually lost revenue in this case through bracketing. But that’s because he bracketed his price down. The story continues.
Third time around, they removed the $1.60 beer and replaced it with a super-premium $3.40 beer. Most people chose the $2.50 beer, a small number chose the $1.80 beer and around 10% opted for the most expensive $3.40 beer. Some people will always buy the most expensive option, no matter the price.
So by bracketing the price up- meaning that the third price point was the highest and not the lowest like in the first example- revenue increased, showing that through bracketing you can push people towards the middle option.
Remember, pricing doesn’t happen in a vacuum. A lot can be perceived by the context you present your product in.
There is a lot of mindset work when it comes to pricing. Ultimately it’s about what’s right for your audience.
Are the new bloggers looking for a course to help them set up landing pages? Then you need to offer a price in the lower range. Or do you have big business customers looking for a course to help their employees learn Quickbooks? Then you most likely can go for a high range price.
What’s best for your audience will ultimately be best for you. If you’re customers are happy and purchasing, you’ll know you’re doing your job of creating valuable content for them.
So for now, just let go of the stress surrounding pricing. Take a deep breath and use your brain. Trust your instincts and pay attention to the advice that makes sense for you and your business.
Have you ever felt stumped by pricing? Let’s talk about it on Twitter. I’d love to hear how you overcame it and how you price your products now.
Download this issue of Tradecraft as a PDF to read and reference at your own pace.