Figuring out the right price for your digital product can feel overwhelming. Spoiler! A magical formula doesn’t exist.
You’ve probably already identified that a wide range of prices exist – without obvious rationale. Knowing a few essential elements that are unique to digital products can help you hit the sweet spot for your product.
The five tips featured in this article offer more than just best practices. Specific product examples are used so you can see each in action.
Apply these strategies to your own products for maximum results….and earnings!
Basics of Pricing Digital Products
There are no hard and fast rules when it comes to pricing digital products. If you search online, you’ll find many different strategies recommended.
The reason…
Pricing involves much more than a simple “what is my product worth?” decision. Considering psychological elements such as discounts, bonuses and up-sells are key to making sales.
1. Start where you are comfortable
These may be the most important five words in this article. No matter where you are in your digital product journey, you have to allow yourself time and space to grow.
Pricing and asking others to pay for your expertise can be difficult for many. If you set a price that exceeds what you’re comfortable asking for, it will hinder your ability to sell and market your product effectively.
We’re not going to dive into the topic of money mindset here, but you should definitely explore podcasts – like this one!
One method that can help you break through difficulty with pricing is to take a value-based approach.
Focusing on quantifying the benefits of your product will allow you to see pricing through a more objective lens.
Bottom Line: Establish a price that feels comfortable for you. It’s okay if it’s less than (or more than) similar products.
2. Increase the price after few sales
Price is not permanent. This is exceptionally true for digital products.
If your product is selling well at it’s current price, you should increase the price. Continue this until you establish a ceiling.
There are a number of products on WellResourced that offer an excellent example of this approach.
Gradual Price Increase over Period of Time
The Dietitian’s Guide to Counting Macros was initially launched at a price point of $15. Over time with the products popularity, the price has been increased to $22.
Overall this product has more than 80 sales and over $1400 in earnings.
But, it’s important to carefully assess the impact of price changes. Their can be a ceiling to the value of your resource.
Large, One-Time Price Increase
The MRT-LEAP Patient and Dietitian resource has a current price tag of $30. Overall this product has more than 60 sales and over $1100 in earnings.
The price was doubled from $15 about five months ago. Sales of this product have totaled 12 since price increase. Compared to the prior 5 month period when priced at $15, sales totaled 22.
This decrease in sales volume may indicate a need to evaluate price. However from a total earnings perspective, the higher price point exceeds performance even with fewer sales.
Bottom Line: Increase your product’s price, but study the impact on sales to determine the optimal level.
3. Consider the lifetime customer value (over deliver)
A customer is likely to purchase from you again if they are satisfied. In fact, research shows that existing customers are 3 times more likely to make a purchase than new customers.
When you price your digital product, you want to over deliver value. The customer should feel that for the price paid, your product exceeded what was promised or expected.
Over delivering value creates repeat customers and is especially important if you have higher priced items in your store. Most often customers will purchase a lower price point product before making a larger purchase.
Take care when writing your product description to offer adequate detail, but not exaggerate the value.
The Complete Client Form Package for Practice Better has more than $1000 in earnings. It is also an excellent example of structuring products and store to create repeat customers.
A higher priced product bundle does offer value but can create customer reluctance. Overcoming barriers is part of selling online.
Customers are given the opportunity to give the product a test drive with a free form, Discovery Call Inquiry. Nearly 100% of purchasers of the package download the free item prior to purchasing the bundle.
Bottom Line: The goal isn’t to make a single sale to a customer, it’s to create a loyal fan that is eager to purchase other products you offer.
4. Use variable pricing
When creating your product, think about opportunities to offer multiple pricing options.
For example, if you are selling a slide deck presentation, you could offer two different price points: (1) presentation only and (2) presentation + participant handout/worksheet.
Many customers, when presented with the opportunity to add a related product that increases the value or usability, will purchase it.
For example, the Gestational Diabetes Client resource includes the option to include the Intuitive Pregnancy Grocery guide at a significant savings over purchasing individually.
Since structuring this product with a variable pricing approach, nearly 50% of customers have chosen the higher price point. Overall, this increases the earnings per customer by 65%.
Bottom Line: Offering related products using a variable pricing structure can increase your earnings.
5. Offer a bonus
How you present your product can have an impact on customer perception.
Good bonuses are designed to add value.
For a bonus to be effective, potential customers must feel like your core product is priced competitively on it’s own. Bonuses should be positioned as free content included with purchase.
You don’t have to create additional content to offer a bonus. Think about how you can position some of the content in your product as a bonus.
This Meal Planning and Kitchen Organization Guidebook is a excellent example of offering bonus content. The inventory list and tip sheet offer additional value for customers.
It’s important to note that a bonus is different than offering variable pricing as was described in tip 4. While the content may be identical, it’s about how you present it to customers.
Re-frame some of the content in your product as a bonus. Write your product description in a way that sells the products, but give the bonuses away for free with purchase.
Bottom Line: Bonuses are powerful selling tools especially when they relate closely to your paid product.
Summary
Pricing digital products requires some trial and error. However, there are some best practices to apply.
Taking a pricing approach that is focused on testing strategies and evaluating the effectiveness is wise.
Be sure to grab a copy of my FREE e-book, “Leveraging Digital Goods: More Money, More Business” with a BONUS getting started checklist.
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