Pricing digital products may be one of the most difficult steps in the process of selling online. You are worried about selecting a price that is too high and might scare away buyers, but also don’t want to underestimate your worth. How do you find that sweet spot? Is there really a perfect price point for your product?
Since launching RD2RD, one of the most common questions besides “what can I sell?” is how to price digital products. This is not a question with a simple answer. Digital products are quite different from physical products and the pricing strategy looks very different as well.
Traditional Approach – Pricing Digital Products
A traditional pricing approach looks at the inputs to produce the product and then applies a mark-up. This might look at the time and materials to produce a physical item and then adding a mark-up or multiplier. While this approach may make sense for a piece of clothing or even a menu item at a restaurant, it doesn’t fit the bill for digital products. This article gives a great overview of the traditional pricing approach. For digital products, you need to look beyond the cost of the input and focus on the value of your product to your customers.
Value-Based Approach – Pricing Digital Products
With the value-based pricing approach, you start not by considering the cost of time and materials, but instead focus on pinpointing the value of the solution your product offers. This approach is rooted in the concept that customers are purchasing a solution, or something that makes their life better.
In the case of a product targeted for business not personal use, the value is often framed in business growth, increased brand recognition or revenue. Whether your product is targeted at consumers or business owners, the key for value-based pricing is an intimate understanding of your target purchaser and the exact pain points that your product solves.
Case Studies from RD2RD Product Listings
Here are three examples of successful products on RD2RD and a closer look at how they build value with a well-written description.
This product’s product description quickly identifies the target customer and offers a “promise” or solution.
Offering a grocery store tour is a business-building opportunity, but is time consuming to organize and prepare. This description clearly identifies the pain points of time and feeling disorganized. A solution to these problems is the value. After establishing the problems solved, the seller builds additional value by listing product features and the contents of the toolkit. The customer isn’t left wondering “exactly what will I get if I purchase this product?”
Imagine if the product description was just 1 or 2 sentences about what a grocery store tour is or simply a list of the product contents. This product description establishes value by clearly offering a solution and then using specific product features to support the “promise” and justify the price.
This is a policy template for private practice dietitians. One of the challenges of a new practice owner is getting essential business documents established.
The product description echoes frustrations private practice dietitians have with getting paid for their services. These pain points are likely reasons the customer is seeking to implement a payment policy for their practice. It builds value by describing the cost of not having a policy in place both in time and frustration.
The seller clearly lists what essential elements are included in the template. The buyer knows what is being purchased and the description also highlights that it is in an editable document format. The list of elements would be less value-building if the seller hadn’t first set the stage by describing the pain points and positioning her product as a solution.
This product is a combination of both a webinar recording and a workbook. It makes a strong promise in the first paragraph which will resonate strongly with customers – “A how-to guide for any RD or RD2Be looking to adopt this approach to their nutrition career.”
It is important that you make it clear who your product is for. This description does an excellent job of this and has been rewarded with numerous sales. The value of the included 15-page workbook can’t be understated and by offering these resources, references and tips in addition to the webinar, the value of the product is increased.
Thinking about how you might bundle multiple items together to create more value and perhaps a more appealing product is a strategy to consider. It is also common to offer multiple pricing tiers for a product and to include additional products at higher price points.
Clearly Communicate the Value of Your Product
When pricing digital products, it is essential to consider the item’s value to the customer. The time and money you’ve spent creating the product isn’t the primary factor in determining your product’s price. When you clearly show the value of the solution, your product will generate sales.
To effectively build value in your product description, you need to have your target customer clearly identified and pain points identified. While this process does take time, it is an investment as the description will generate ongoing sales. Investing the time in crafting a product description is one of the most important steps you can take to achieve success selling online.
Want to learn more?
Selling digital products is a great opportunity for your business, both to generate passive income, but also to attract new customers. To learn more about how to create digital products, download my FREE ebook, a guide for RDNs getting started selling digital products.
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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