How to Price a Product
I'm trying to figure out a good price point for a new product, and am struggling a little in finding the right place, so I thought I'd ask all of you for any tips you might have.
I'll start with what I've picked up along the way:
-Focus on the value you provide, not what it costs to make the product. (This is hard to do sometimes as we move from thinking like hourly employees to thinking like businesspeople.) If your product can produce 10x the value (however that is defined) than the cost, you're doing pretty well. Make sure to mention that point.
-How much would it cost your prospective customer to obtain the result you're offering in another way? For instance, if it's an information product, how much would it cost in classes, time, effort, and missed opportunity for your prospect to achieve his desired result on his own? Again, if you can make this case convincingly and charge a fraction of that cost, you're doing pretty well.
-Try not to compete with other products on price, because that's a race to the bottom. Try instead to compete on quality, speed, or personal attention.
-Perceived value is important. Often you can sell the same material in a video for much more than you can in an ebook format.
-Similarly, pricing too low with the goal of moving more units can backfire, as people tend to think products are worth what you charge, ie if it's priced like nothing it's probably worth nothing. Not sure if this is true 100% of the time.
-Ultimately it comes down to testing, because the numbers don't lie, and anyone who tells you something can be wrong. Unfortunately I'm not sure I'll be able to test this one.
-Be confident in your pricing. If you really believe in your product (which you should if you're selling it at all) then don't be afraid to ask what it's worth. If you find the right audience, brand names and experience shouldn't matter if you're delivering (or overdelivering what you promise). As mentioned above, people won't take your product seriously if you don't!
-I also liked this article on the subject: Product Pricing Primer
...All that info and yet I'm still stuck on my own pricing! Any thoughts from you, oh wise warriors?
I'll start with what I've picked up along the way:
-Focus on the value you provide, not what it costs to make the product. (This is hard to do sometimes as we move from thinking like hourly employees to thinking like businesspeople.) If your product can produce 10x the value (however that is defined) than the cost, you're doing pretty well. Make sure to mention that point.
-How much would it cost your prospective customer to obtain the result you're offering in another way? For instance, if it's an information product, how much would it cost in classes, time, effort, and missed opportunity for your prospect to achieve his desired result on his own? Again, if you can make this case convincingly and charge a fraction of that cost, you're doing pretty well.
-Try not to compete with other products on price, because that's a race to the bottom. Try instead to compete on quality, speed, or personal attention.
-Perceived value is important. Often you can sell the same material in a video for much more than you can in an ebook format.
-Similarly, pricing too low with the goal of moving more units can backfire, as people tend to think products are worth what you charge, ie if it's priced like nothing it's probably worth nothing. Not sure if this is true 100% of the time.
-Ultimately it comes down to testing, because the numbers don't lie, and anyone who tells you something can be wrong. Unfortunately I'm not sure I'll be able to test this one.
-Be confident in your pricing. If you really believe in your product (which you should if you're selling it at all) then don't be afraid to ask what it's worth. If you find the right audience, brand names and experience shouldn't matter if you're delivering (or overdelivering what you promise). As mentioned above, people won't take your product seriously if you don't!
-I also liked this article on the subject: Product Pricing Primer
...All that info and yet I'm still stuck on my own pricing! Any thoughts from you, oh wise warriors?
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