Overview on Pricing
Pricing Strategies - Getting Started
There are some things that I want to talk to you about related to pricing before you head off, create a sales system, put up a website and stuff a price on your product.
The aim of this report is to give some insight into the versatility you have as an online marketer with your own products. The problem is, most people just seem to whack a price on their products with little time spent thinking about it, why they've priced it like that, and what factors are going to contribute to whether it's a successful decision. Sound complicated and a lot of work? Well, let me tell you it's not.
But I think it's really important that I show you just how much freedom to experiment you have with regards to pricing, and what effect getting it wrong can have in a number of ways, so before you put a price on your product and release it to the world, take some time out, have a read, pick up the points and take them into account using them as kind of a checklist.
The Bigger Picture
Now understand, there's a much bigger picture to this than most people realize. A lot of the time prices are put there, just because they can be and possibly fitted loosely around competition and other products and services offering similar things, however, it's not just about planting a number and a dollar sign behind it. All through this process you should be asking yourself lots of why questions. Some of the time, people ask me why the heck I go so in depth into subjects and talk about why they happen. They just want to know how to make a whole load of cash real quick.
Well, I say to them I can tell you how to do stuff, but if the situation changes, and you didn't know why it worked in the first place, then you're going to have to come right back to me again, hand me another five hundred dollars just to find out how to do the same thing in a different way. However, if I tell you how things work, you can take some serious knowledge and know-how away with you, and you have the power to adapt to the fast paced changing world of business online or offline. If you can't adapt, you're dead. Or your business is anyway.
Like I say, there's quite a lot to this, and a lot of things that we're going to talk about, and there's going to be a load of questions that are going to pop into your head. Does competition matter in such a big marketplace with regards to pricing? Should I be cheaper? Should I be more expensive? How do I know when to be which and why? Should I give special offers to particular groups of people? Who? Why? Should I offer different versions of my product at different prices? How do I do that, and how do I know if I'm doing right?
There's a shed load of answers about the above and much more that I'm going to give you in a moment. But all the way through this I want you to keep in mind the flexibility you have as an online marketer with your pricing. Get this right, and it could easily mean double the profits for you. Get it wrong, and it's likely you'll have trouble selling anything at all.
Pricing with Regard to Competition
So, with the formalities and generalizations out of the way, lets look at how you should price your products with regard to competition. The reason I want to talk about this first, is simple. When you're looking at pricing, the very first thing you're likely to do is say, hey, so what is everyone else charging for similar products? And you may go from there.
Now there's nothing wrong with doing this at all, but there's more to think about, and a lot more questions to ask than a simple can I beat what this guy is charging for his service?
Your price doesn't have to beat everyone else’s out there for you to get sales. This is something that I learned a long time ago, and you may remember me talking about actually increasing my sales by putting the price of the monthly membership up, and offering an option that was actually ten times more money up front, which increased profits even further.
You really need to be aware of what other people are charging for their products, but that doesn't by any means signal that you have to go out there and beat them. Imagine you've just started up an ad tracking and autoresponder script site that's so detailed, and so professional that it smacks the pants off the competition. But see the other sites offering the same service are hanging around at the ten dollar per month mark.
Does this mean that you have to go and beat them and have a lower price for anyone to look at you? Nope, not at all. What you have on your hands is a premium product, and you shouldn't be worried to sell it at a premium price.
Rule 1: Premium Products Sell at
Premium Prices
So, here’s rule number one. If you have a great premium product, don't be afraid to bump the price up. You do not by any means have to beat a competitor’s price to be competitive, in fact, by putting your price up, it's quite possible that you'll outsell your cheaper competition. Why? Because a higher price screams quality. Don't, for one moment, believe you have to have the best price to make any sales. That's just not true, you just have to have the best sales system, and of course a premium product if you really ever want anyone to buy from you again.
Rule 2: Wowing Through Price Is a Bad
Move
The fact is, if your price is too low, people look at you and wonder why the heck you're charging that tiny amount. If your brand spanking new piece of advanced technology software is really as good as you say it is, why does it only cost ten dollars? So there we have rule number two. Never price yourself so low that you think people will look and think wow that’s a quality sounding product, look how little it costs! That's not what they're saying at all. They're saying, “Wow, look at how little that costs. There can't be that much to it.”
So in effect, all you're doing here is adding even more value to your product through a higher price. It might be the same product, but I tell you now, it's much more likely to sell more copies at a price that someone might look at and think that it's reasonable, or average than something someone might look at and fall off their chair at how cheap you are.
Don’t Be Afraid
Too many people are afraid to take the leap and price their products as they believe they're worth. Too many people look at competition and think they have to cost less otherwise no one is going to buy their stuff, or they'll make less money out of it. This is simply not true. Don't undervalue yourself just for the sake of being cheaper. If you have a better product, you put a higher price tag on it. The experimentation and playing around to find the right combination of offers, deals, follow-up and pricing options can come later.
I could show you so many products that are out there right now, in competition with each other, but one is charging a heck of a lot more than the other. How about this guide, for one? Here's us charging you a thousand dollars for the complete set of manuals, but there are plenty of other guides out there that cost ten dollars. Will the quality of both of them be the same? Looking at the price alone, from a customer’s point of view, I highly doubt it.
Times Are Changing - Business Needs
To Adapt
How about the latest purchase you made for your house, whether it was a whole work surface, a new garage door, a toaster, a dinner table, whatever it was. I bet if you think about it, you'll see that times have changed. A long time ago, even before I was born, people wanted things that worked. They were just ok. But nowadays that's not enough. It's got to be the best, the fastest, the nicest, the easiest to use. There's a real market for premium products emerging. Make sure you don't place yours in the bargain bin if it's meant as premium product, not a bargain basement product.
Increase Sales by Presenting Choices
Ok enough of that for now. I want to talk about something else that's rarely done, especially in the world of online marketing and info products, and that's offering different price plans from the word go. Sure people might change their price, put it up and down to experiment, put on offers and so on, but that's not doing much if your original plan isn't well thought out.
Even with the simplest of single sale info products such as this, you're presented with options. The more, the better to be honest. Whether you're a high ticket item offering smaller chunks to be paid at extended periods, or a low priced membership site that does the opposite, and offers a lump sum that gives access for three months, six months or even a year.
Remember, the sales process is all about answering the customer’s questions, and squashing their fears or any problems they may come up with in their minds for not buying your product. It's no good you selling someone on something and then they find out they don't have the payment option they want. Make sure you add multiples of these. It's simple, if there's anyone out there with a website that only offers one payment option, they're losing sales. Don't let this be you.
Rewards for Customers Equal More
Cash in your Pocket
Rule five, and one of the most important. Never ever, no matter what you do, ignore the people that have purchased from you before. It's not hard to come up with ways to reward them. Right now, I'm putting together an ID number system for myself that allows previous customers to come along and buy my stuff at a discounted rate.
These people are the most important of all. You've already got them on your lists, they've already bought your stuff, which means they're willing to spend money, and of course they trust you, and they're serious about wanting more information, or the products and services you offer. Remember this, because if you forget you'll go broke. It's as simple as that. You want to keep the customers that are buying from you happy, and you want to stay in touch with them. If you don't go out of your way to please them, you'll have to go out and spend wads more on finding new customers. Look after them, because they'll be with you for a long time to come and will form the base of a successful business from the word go.
Trials & Lead Generation
Rule number six: Avoid free trials unless you're aiming for lead generation. The problem with free trials is that you'll attract all sorts of freebie seekers, and just like I don't want anyone here that doesn't want to make a successful business of themselves, I'm sure you don't want people wasting your time either, taking up valuable resources and just picking something up because it's free.
As I learned with my big experiment site back in the day, it's far better to charge a small amount for a short trial, say one to three dollars for the first week simply to sort those people out that are coming to you just because they can, and those that are coming to you because they’re serious.
I've got a great example for you here too. Now a good friend of mine set up a site when we were in our early days on the scene. He had a pretty good product backed up by a multi level affiliate system, or a matrix of sorts. Anyway, he started promoting and all was going well, until word started spreading around some of his affiliates about some guaranteed signups site that sold signups to anything free, for a fee.
Now unfortunately I'm sure you can see what's coming. Not only did the affiliates go for this one, which wasn't much help to them, because of course most of these untargeted people were just freebie seekers signing up because they were getting something in return from the guaranteed signups sites, and only a tiny percentage were actually going for his hosting package or the pay plan he had in place. What he ended up with was a system clogged full of people that had no idea what they were subscribing to, weren't making him or themselves or the people that referred them any money, and had no interest in doing so. A real resource disaster case, that one, because it rendered the pay plan almost useless. Make sure you do this one right and offer a trial for a small fee if your product permits. You could be looking at a similar costly situation otherwise.
Banning the Word Cheap
Rule seven: Never tell anyone your product is cheap. Yuck. Nothing major to dwell on here, really, but never ever describe your products as cheap. Competitively priced - yes, the best price for that service - yes, cheap - no way. That just devalues your product full stop. More often than not, people don't want cheap. They want quality at a good price, especially in online business.
Rule eight: Don't be afraid to experiment with pricing strategies. I can understand how you might be worried that customers, who bought your product costing four hundred dollars, would be annoyed that they receive an e-mail for a special seasonal offer cutting that cost in half, but it seriously doesn't work that way. You're not offending anyone by doing this, and it's the only way you'll come up with new techniques and tactics yourself, through testing.
The fact is real world businesses do this all the time. They have super sales, then they put prices up at Christmas time and particular times of the year when their products are going to be more in demand, discount things daily, add and remove discounts and so on. It's not a wrong thing to do. It's not unethical. It's business. And if your customers have ever left their houses to go and purchase something from a store, they'll know this too.
So here's the deal. If you need some extra cash, why not offer a limited number of members, a long subscription at a discount of a month or so throughout the year? I have to say this one works real well, and I had a large percentage of my member base from my previous site hand me large up front wads of cash that I could put to good use making more cash. If I'd left them at their twenty dollar per month fee, I might have made an extra few hundred dollars, but at a slower pace.
There's nothing wrong with you adding discounts to the end of five or six day follow-up messages, so on and so forth. In fact, there's nothing wrong with changing your price on your main page without any warning or notice. Don't fall into the trap of worrying what previous customers are going to say, because seriously, this happens in the real world all the time. I know in all my experimental days I've never had someone come to me and shout or complain because I pulled a quarter off the price a day after they bought it. If you have a quality product, that's good enough, not to mention you owe it to yourself to try different methods like in the above examples until you get things dead perfect.
Value Added
Rule nine: Always add value. We've got a whole section that talks about adding value in a moment, through bonuses, different approaches, promo's, and the like. But for now, remember when coming up with a price for your product, don't let it be the only product. Strange sentence indeed, but look at it this way, what kind of things are going to allow you to increase your price and actually persuade people to buy your stuff at the same time?
The quality of your product and sales system are the obvious, but how about bonuses? What about testimonials from known and trusted people in your field? It's not just material things either. What about your reputation and how others see you? So here's a final tidbit of advice for you. If you feel that your product isn't worth the four hundred dollars you're charging then increase its value through these methods. If you still don't feel it's worth it, then at this point, you know that you're charging too much for it.
Ok, I'll be honest with you. If you want to succeed and get your price just right, without being 'cheap' you have to do a little work. A little research and a little brain work. It's not all straight forward one two three. Understand that it's not about being cheaper than anyone else, it's about pricing your product correctly depending on competition, who you're aiming your product at, its quality, and your research and tracking results.
By now you should have a clear idea how much you want to charge, and how you're going to go about it. If you have, great. Just remember, the price you put up there on launch day doesn't have to be set in stone by any means. It's there to be tinkered and played with by you until you feel it's correct, and your testing shows you that it’s correct. Have a little confidence in your stuff. Next time you create that amazing info product, membership site, or piece of software, try to avoid selling it at rock bottom prices, because I assure you, it's not gaining you sales, it's losing you them.
Summary
A shed load of questions and answers we'll be covering in this section.
It's still a car, but it's the best, a premium product and the price reflects that.
So, rule number one: If you have a great premium product, don't be afraid to bump the price up. By putting your price up and above the competition, you're actually likely to outsell super cheap competition.
Why? Simple. Would you expect the same quality from a $10 course as from a $1000 one? So there we have rule number two. Never price yourself so low that you think people will look and think, “Wow, that’s a quality sounding product, look how little it costs!” Because that's not what they're saying at all. They're saying, “Wow, look at how little that costs. What’s the catch?”
People will soon hear about how you’re worth every penny.