How do you accurately price your product to make sure it sells? How can you utilize resources to best achieve maximum results?
In the “Internet Marketing” world, so many people get caught up on the “Internet” aspect.
They get caught up on how to get websites up, how to get payment processes running, how to check PayPal accounts.
Instead, you need to concentrate on the “Marketing” aspect. Just because something is online doesn’t mean that it’s not subject to the same rules in the open marketplace.
How to Approach Pricing
This applies to both Software Products and Digital Information Products.
Software: anything where a customer logs on and a service is up and running. It can be anything from a WordPress plug in to a social media site.
Digital Information Product: anything else that a customer might purchase from you online, such as training videos, E-Books, PDF reports, etc.
You need to look at the objective you’re trying to reach. You’re not going to get to a $1 million dollars selling $7 products but you’re not going to get there by only selling 1 really expensive product to 5 customers either. That’s why you need to find the gaps in the marketplace and you should ideally have 3 different levels of products.
Lead generation products: this could be something that you give away but Lance considers anything priced under $47 as a lead generation tool. This means that he can spend money on these products in order to generate those leads who will buy more expensive products later. An example of this is The Paper Template Sales Letter Plugin.
Mid- level products: these are your products from approximately $47 to $200. You will make some money on these but you’re not going to get rich.
90% of your customers are going to take your lower end products.
7- 8 % are going to take your mid-level products.
1 % are going to buy the high- end products.
Finding the Gaps
When deciding where your product should fall in the above 3 categories, you need to find the gaps in the market and take advantage of them.
We’re going to use Lance and Robert’s Backup Creator WordPress Backup Plugin as an example.
When they realized that there was a need and a want for this product and decided to develop it, they sought out their competitors.
What did the competitors’ products DO and how much were they selling for?
They noticed that there were about 3 competitors that seemed to be doing well. The interesting thing was that they all did basically the same thing and were all priced around $197-$297 “one time” and $150 to $300 recurring yearly. They saw there was a huge gap in the marketplace. Why?
Because all of these competitors had a huge customer base and would not be able to lower their prices for future customers without alienating their current customers.
New competitors could not sell it for as inexpensively as Lance, who priced the basic model at $7, because they were missing out on the secret that, for Lance, this was a lead generation product. It was not MEANT to make significant profits.
Because the initial “basic” model was priced so low, he now had room to do ANYTHING else with the product between $7 and $197, which gave him the opportunity to expand and develop the “Ultimate” version at $47.
How to Start Selling Now!
Now that you have thought about your product and your goals and know how to approach your product’s pricing, here are a couple of ways to avoid spending a lot of time figuring out if you have a product that sells.
There are ways to get products made so that you can test the market and then you can enhance them.
On the software side, there is “Private Label Development”-this is when developers write software code and then sell it to you.
www.codecanyon.net: This is a marketplace for developers to develop and sell their software, including the rights. Then, you can do whatever you want to do with it-you can sell it as your own product, give it away as a bonus, etc. You can even the developers to make changes to and maintain the software.
On the digital information product side, it’s “Just Do It”
It’s never going to be done “perfect” so make sure it’s good enough and then get it out there. The marketplace will tell you what it wants and you can continue to make upgrades and improvements.
You can also outsource many aspects of digital product creation.
If you don’t write (i.e. blog posts, E-Books, etc.), the simple solution is to record all of it and then have it transcribed.
On O-Desk (now www.upwork.com), you can get transcription services for $20 for 60 minutes of audio. And, now you have your audio AND your book that you can package together.