Pricing A Product - Is it better to price high?

38 replies
Hi Warriors

I have a new piece of software coming to the market soon and the trouble I am having is with pricing the product.

I remember reading somewhere price it high if it Doesn't work you can always drop the price

Is this a wise move, could this not lose you sales? The problem I am having is I cannot really find anything to compare it with. I am trying hard to come up with different price structures.

I guess in the end the market will decide the price but am I better of starting on the high side first?
#high #price #pricing #product
  • Profile picture of the author spectrefax
    Originally Posted by anton343 View Post

    Hi Warriors

    I have a new piece of software coming to the market soon and the trouble I am having is with pricing the product.

    I remember reading somewhere price it high if it Doesn't work you can always drop the price

    Is this a wise move, could this not lose you sales? The problem I am having is I cannot really find anything to compare it with. I am trying hard to come up with different price structures.

    I guess in the end the market will decide the price but am I better of starting on the high side first?
    I'd simply start with what YOU think is a fair price for what you are offering. Then adjust as necessary.
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  • Profile picture of the author BenoitT
    Split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test
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    • Profile picture of the author anton343
      Originally Posted by BenoitT View Post

      Split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test
      I keep hearing that I have never really got that far in my IM career maybe it's time.....

      Thanks

      Anton
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    • Profile picture of the author scrofford
      Originally Posted by BenoitT View Post

      Split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test split test
      Of course you want to split test. But the OP is trying to figure out a STARTING price. After you figure out a couple of different prices, THEN you test.

      To the OP: Yes start out with a price you think is fair and go down if you have to. So don't start out too low.
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      • Profile picture of the author George Langer
        Anton,
        more expensive products have usually lower conversion rate, but you can always drop the price as you write (but not vice versa).

        What I would do:
        - try to find similar products and compare prices/values
        - ask how much would YOU pay for such a product
        - try to estimate profits based on expected sells on given price
        - use upsells, downsells,...
        - measure and split test of course:p

        Hope this helps.
        George
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        • Profile picture of the author Gary King
          Originally Posted by George Langer View Post

          Anton,
          more expensive products have usually lower conversion rate, but you can always drop the price as you write (but not vice versa).

          What I would do:
          - try to find similar products and compare prices/values
          - ask how much would YOU pay for such a product
          - try to estimate profits based on expected sells on given price
          - use upsells, downsells,...
          - measure and split test of course:p

          Hope this helps.
          George

          Good advice here...

          Just to add a bit... start with what YOU think it's worth as George suggests. Ask prospective buyers what they value it to be. Find the harmony there and go for it!

          All success,

          Gary
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          • Profile picture of the author George Langer
            Originally Posted by Gary King View Post

            Good advice here...

            Just to add a bit... start with what YOU think it's worth as George suggests. Ask prospective buyers what they value it to be. Find the harmony there and go for it!

            All success,

            Gary
            Sure as a gun
            But be cautious when asking prospective buyers about price because they often want lower price

            Good luck,
            George
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  • Profile picture of the author Bryan99
    Depends on the software, and what it can do.

    If you're sure that the buyers can make $100 in a few days with your software, you can easily sell it $100+, but if your software is just a simple indexer, I don't think you'll have any luck selling it.
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  • Profile picture of the author aminur
    you need to work out the cost to start with. How much it cost you to develope the software. How many ways can you use the software. for example if it only allows backlink then it's just a backlink creator price. If it can create fresh content this can be used so many different ways. So totally you need to figure out the power of the software and then find different product which does similar work and sold price, so this way you can fix the puzzle. Also test it will real time income so you can show people how much they can earn up to.

    cheers
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  • Profile picture of the author RD5
    Allow as many people to test out your software as possible. Don't be afraid to give some free versions to get feedback, comments from the users, because the way (as the creator of the software) you use and operate the software will be completely different for your users, no matter how "simple" you think your soft is. What's intuitive to you can be completely weird for someone else.

    Once you'll get some feedback create two completely different versions of your software:

    FREE with basic stuff.
    PAID for advanced stuff.

    The free version of the software will give you a sh*tload of users if it will get added to directories/torrent sites and so on. (only if the software is any good)

    Then do little split tests to see how different offers convert.

    We can't just say "charge $997", because we have no idea what kind of software have you created and does it provide any value...

    BUT if you know that the software is good then of course - charge a lot for the premium version
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    • Profile picture of the author anton343
      Originally Posted by RD5 View Post

      Allow as many people to test out your software as possible. Don't be afraid to give some free versions to get feedback, comments from the users, because the way (as the creator of the software) you use and operate the software will be completely different for your users, no matter how "simple" you think your soft is. What's intuitive to you can be completely weird for someone else.

      Once you'll get some feedback create two completely different versions of your software:

      FREE with basic stuff.
      PAID for advanced stuff.

      The free version of the software will give you a sh*tload of users if it will get added to directories/torrent sites and so on. (only if the software is any good)

      Then do little split tests to see how different offers convert.

      We can't just say "charge $997", because we have no idea what kind of software have you created and does it provide any value...

      BUT if you know that the software is good then of course - charge a lot for the premium version
      I will be asking a few warriors to test for me and of course they will get the software for free for helping out. This may be a couple of weeks away but will post for volunteers when ready

      Anton
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  • Profile picture of the author David Jackson
    Originally Posted by anton343 View Post

    I remember reading somewhere price it high if it Doesn't work you can always drop the price

    I guess in the end the market will decide the price but am I better of starting on the high side first?
    Start out high. Higher prices often convert better than lower prices because people generally equate higher prices with higher quality. Then, once you decide on a price point - split-test.

    David Jackson
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  • Profile picture of the author Steve Diamond
    Another pricing strategy that I think is worth borrowing from Sean D'Souza (a very good marketer) is to have a standard and a deluxe edition priced very close together. For example:

    Standard Edition: $63.00
    Deluxe Edition: $77.00

    Give the Deluxe Edition more features and/or add-ons, and it becomes a no-brainer decision. Almost no one will buy the Standard Edition. This helps to make customers feel more comfortable with a higher price point than they might tolerate otherwise.

    Steve
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    • Profile picture of the author Sandor Verebi
      Hi Anton,

      Useful advices above.

      Perfect pricing your new product can be a pain, but there are some base principles. Let me to share severals.

      Please consider:


      - what is your business goals: fast money or long term business

      - what is the cost of production and your profit margin

      - which kind of benefits will gaine customers from your product features

      - how much is the demand for your product

      - the products of competitors how to meet that need

      - how you and your product are perceived in the market

      - who are your customers: are they budget sensitive or convenience centered or status makes a difference to them

      - the estimated volume of product you can sell


      Hoping you can use my two cents.

      Many successes,

      Sandor
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    • Profile picture of the author anton343
      Originally Posted by Steve Diamond View Post

      Another pricing strategy that I think is worth borrowing from Sean D'Souza (a very good marketer) is to have a standard and a deluxe edition priced very close together. For example:

      Standard Edition: $63.00
      Deluxe Edition: $77.00

      Give the Deluxe Edition more features and/or add-ons, and it becomes a no-brainer decision. Almost no one will buy the Standard Edition. This helps to make customers feel more comfortable with a higher price point than they might tolerate otherwise.

      Steve
      hi Steve

      I lIke this idea. The software license will be for single domains or unlimited domains I was thinking along the ideas of $67 and $87.

      Also becuase I don't want anyone to miss out I am considering offering a 3 month payment plan for both.

      Anton
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  • I would split test it. Also I would have multiple version with multiple prices and split test it. I would build a funnel with multiple pricing. I would have a version where you can help them, with support, with Done 4 you with coaching etc..
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  • Profile picture of the author asankae06
    use a low price. you can make high number of sales
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  • Profile picture of the author Joyful Thiek
    So far as products go, low pricing has seem to work for me. Besides, I really enjoy getting notifications of payment. When you price it low, more people buy it - my observation so far as experience goes.

    Cheers,
    Jou
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  • Profile picture of the author Moneyerr
    You can evaluate the worth of your product by the hard work, time consumed to create it and its unique features. Keeping the high price will reduce the sale and also the product will not become popular. But on the other hand if you keep the price low, than it will be in the reach of more people and sale will increase and your product will also get fame.
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  • Profile picture of the author tpw
    Here is the deal.

    If you price too low, you will have to sell more to make what you want to make with it.

    If you price too high, you will lose some buyers.

    The right answer is to find the price that makes you the most profits.

    If you split test as others have suggested, and document the sales conversion rate at each price point, and then feed those numbers into bar graph, you will know the best price at which to sell your product.

    When I did professional ghost writing, I tested pricing from $20 and article to $475 an article. The sweet spot was at around $45 an article for high volume. It enabled me to maintain the desired volume, while maximizing profits.

    At $75 an article, I still made a large number of sales, but my monthly profits at the end of the month were about 2/3rds less.

    At $25 an article, my margin was so thin that I was not making much money, and the volume was actually a bit less than volume at $45 an article.

    When you have the data available to know the truth of your best price point, you will not need to ask us the right way to go.
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  • Profile picture of the author Liam Ireland
    I heard that if you put a "7" or a "9" at the end of a price it converts better. For example a $47 product may sell better than the same product but priced at $45. But I'm not completely sure myself.
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  • Profile picture of the author celente
    yes I agree with testing this.

    I test everything these days, copy, prices, offeres, guarentees, everything. If you are not doing this, you are leaving lots of money on the table.
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  • Profile picture of the author pmbrent
    One other strategy is you could simply ask people what they would be willing to pay for your software. Post a survey in a forum that your software will be utilized and just analyze the results.
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  • Profile picture of the author jwardz
    It all depends on your competition. Check them out. See what they are selling it for. You can go one of two ways. Undercut the competition and get a lot of sales or price it high and get fewer sales but the same amount of money, if you market it correctly.
    Joan
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  • Profile picture of the author seobro
    This depends on what market you are aiming on. High price is a good idea for a luxury item or service. Problem with software is people expect to get open source. Stuff they can down load for free and put on every machine with a cost of zero.

    Few think about who pays salaries for programmers. People expect others to pay. This can be an uphill climb for all of us.
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  • Profile picture of the author tonnele
    Price your product at the price point that's suitable to you. If you are offering great value price it high? I put the question mark because the way you price something depends on your core values. For example "if i price it high I might be to greedy and people may see me as such" or "If I price it low people will see me as reasonable and fair".

    As an entrepreneur it is duty to to make the most money you can while delivering value. Always remember that and you will be financially successful
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    • Profile picture of the author James Clark
      The software should be priced based on the problem its solving. Also, how are you going to market the software? If you are going to sell it to your subscriber list well it depends on the relationship your have with your list.

      If you are going to try to sell it by sending them directly to a sales page, good luck with that one. But listen up! This is a clear example of what marketers are telling you about building a relationship with your list, because it means money in your pocket.

      The better the relationship the higher the conversion rate. Pretty much like a hooker(LOL) strictly business.

      You don't have to become best friends to do business together.

      No disrespect intended ladies. Just trying to make a point.
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  • Profile picture of the author vishalduggal
    I sell my same info product from $7 to $129.95.

    For me the $27 and $37 converts the best. However I am still checking out what price converts the best or gives me the most profits.
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  • Profile picture of the author omk
    There's no hard and fast rule when pricing a product. You have to take several things into account. Like type of product, is it disposable or long lasting?, info product or physical goods?, male or female related?, sell many times or sell once? Is the product good quality or on cheaper side? Is it rather unique?, How many competitors do you have and how much do they sell theirs for? Is this your main product or do you want this product to introduce the buyer to your other products?

    As you can see, there are many variables that can affect your product pricing decision. In the end, you should always rely on real world testing. Only product price testing will give you the real info you need to make your decision.
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    • Profile picture of the author aesoprock
      Without more concrete details about the product you're selling it is hard to give you specific advice.

      Competing on price is not the best strategy. Far better to provide exceptional value through an excellent product and work on features that outshine all your competitors.

      Once you have a high value product you should then target a market that has the buying power to purchase your software.

      Want an example? The market segment that shops at Best Buy would probably not spend more than about $7000 for one of their high-end video cameras.

      A different market segment will pop over to the Red One site and think nothing of spending $50,000 or more on a camera setup.

      Find a market that has money - solve a problem that no one else is solving - charge large sums of money. There, now you have an action plan.
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  • Profile picture of the author Fazal Mayar
    I would suggest something from 20-30 range. More then that, it really has to be of quality or it wont sale
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  • Profile picture of the author JamieSEO
    Originally Posted by anton343 View Post

    Hi Warriors

    I have a new piece of software coming to the market soon and the trouble I am having is with pricing the product.

    I remember reading somewhere price it high if it Doesn't work you can always drop the price

    Is this a wise move, could this not lose you sales? The problem I am having is I cannot really find anything to compare it with. I am trying hard to come up with different price structures.

    I guess in the end the market will decide the price but am I better of starting on the high side first?
    Personally - I always recommend pricing higher.

    The issue with split testing different prices or starting off lower is purely the psychology of a buyer.

    How many buyers have you ever heard complain about a price being REDUCED?

    Now think about how many buyers throw an absolute hissy fit if you increase the price of just about anything?

    The only exception I use is if the first x buyers are going to get the cheap rate and then it will be increased on a certain date or after a set number of sales - this is effective for getting people to act more quickly and also good for cash flow.

    My philosophy is when in doubt, always price up.
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  • I would say that it really depends on the product and the value that it can provide. If it is anything to do with IM then you could try and get some Senior Warriors to beta test it for you and give an honest opinion as to its value.

    From there you can decide on a realistic price point. Of course if you launch it as a WSO first you can increase the the price as you get more sales, so effectively you are letting the market decide what its worth. If its good enough people will buy.
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  • Profile picture of the author drmani
    Originally Posted by anton343 View Post

    I have a new piece of software coming to the market soon and the trouble I am [/SIZE][SIZE=2]having is with pricing the product.
    ...
    I guess in the end the market will decide the price but am I better of starting on the high side first?
    Here's a formula to use:

    * pick any number between 1 and 10,000 (even higher, if your niche will pay)
    * put a dollar sign before it, and slap it on your sales letter
    * send targeted traffic to it
    * watch your sales conversion rate

    - - -

    Two things will happen:

    a. no one buys
    b. people buy

    - - -

    If no one buys, drop your price by 10%, and see if they buy.

    Repeat one or two more times.

    If still no one buys, RAISE your price by 10% and test again.

    Keep repeating - higher and lower - until you see sales coming in.

    - - -

    If people buy, drop your price by 10%, and see if more buy (or less).

    Repeat one or two more times.

    Then RAISE your price above the baseline by 10% and test again.

    Watch the results you got from this test.

    - - -

    At one point or two, sales (and/or net profit) will fall below your peak.
    That's when you (probably) know what your ideal price point is.

    - - -

    And then, you'll keep being surprised when different sources of traffic
    force you through the same testing process all over again

    I too have sold the same ebook for $5 and for $147... so you could leave
    a LOT of cash on the table if you're too lazy to do this at least once
    in your product's life cycle.

    All success
    Dr.Mani
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  • Profile picture of the author luckyshah290
    Sometimes pricing high can be profitable .. depends on the product you offer .. But otherwise price it as affordable as you can ...

    Not too high . Not too low ...
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  • Profile picture of the author paulie888
    You should just begin selling it at a price that you think is fair, and then adjust it through testing to figure out what price maximizes your profit/revenue (with a digital product, fulfillment costs are usually next to nothing, so either figure should work).

    Don't delay your product launch on account of this pricing issue - just quickly decide on a fair price and start marketing it as soon as you can. You don't want to waste any time (and thus profit) by holding off on launching your software due to some trivial issue like this!
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  • Profile picture of the author ShawnPeter
    Hi Anton,

    Why not give a basic set FREE on WF. After which get some feed back, also ask what these people what price they would pay for. I believe by now you should have a rough idea on what your price would be. From here, sell to the public or market and get more feedback to adjust the pricing and the benefits of the product.
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