Have we 'shot ourselves in the foot' by selling products at crazy prices?

That's a really good idea. I never thought of that. Thanks Paul.

Di

I agree with what was an excellent post but I think you're unnecessarily putting yourself down Steven.

There are a huge amount of people that put in 14 hour days and don't earn jack s***.

Besides, for all those regrets you still get to play that magic the gathering thing you play all day and you enjoy that, so it's pretty good really.

If you get bored in your retirement and would like to unload on someone I would just love to be that someone.

That Comment "But boy, If I could do it all again" has me more curious than a bag full of cats.

It seems with 16hours a month taken up you have a few spare hours for a beer, I'm In Australia so I would happily drink a beer with you at any time of day. I have a few bar signs I can put behind me so It looks like I'm in the pub on the webcam.

GREAT Comment, This is my major flaw. I made a bunch of sales of a product at the $37 mark then for no reason other than wanting to see a better conversion percentage I dropped my price. (At least in analysis that is the conclusion I came to)

I was chasing a conversion percentage rather than a sales number. Who cares if its 1.7% If you make the required Number of sales?
Sure you could look at a lot of things to make your conversions better but the EASY way is drop your price.
(After all, Who wants to admit to themselves the sales copy that they took 3 days to write is crap?)

By reducing the price, I reduced the value, which reduced the sales and actually lowered the conversion rate. It was a Freakin disaster!
Now the product is a free bonus and a giveaway on facebook.

Killed my Own product about half way through its cycle.

Its a mindset and its actually quite tough to get out of, that feeling of selling 1000 at $5 is nice (I assume), But I would prefer the feeling of selling 100 at $47 a Month.

Thanks for the great comments on this thread I took a lot out of it.

Cheers all

Oda

GOLD, Steven... that's what this post of yours is worth!!!

If only MOST will read it again and again until it sinks in!

I know I will!

I keep asking myself nowadays...

How many WSOs does Allen Says bring out and sells for $5?!

Of course none. He spent his entire time for MANY YEARS
building just one AUTHORITY site. Look at it today. It
brings him MANY thousands of dollars every single day...
without losing his soul selling to thousands of people for $5.

So, yes, Steve, you are right and I agree 100% with you. But
what I have to say is that it's NOT too late to start an
authority site. I am thinking VERY SERIOUSLY about putting
most of my efforts in the coming months on just one or a
couple AUTHORITY sites, outside IM, that can grow as big
as this forum!!!

And why not??!! We all know so much, even much more than
the many people out there who are building AUTHORITY
sites that become worth MILLIONS of dollars. The only
problem is that we are spending MOST of our time creating
and selling $5 WSOs... and dealing with the attendant issues,
re customer support, etc that comes with it.

Yes, Steven... not FUN at all, I agree 100%!

Again, below is the link to Frank Kern's video that EVERYONE
should watch, to stop this madness of selling $5 WSOs,
regardless of the rationale behind it:

http://frankkern.com/state-of-the-internet-success/


Kingsley

I could not have said it better myself. I recently realized that while the money might be great I have NO time to enjoy it or my family.

The days of working 18 hours straight or 100+ hour weeks stop now.

Thanks for offering some insight from someone nearing the end of their journey instead of someone only in the midst of it.

Best of Luck Steven!

James

P.s God Bless your poor wife...I can't even stand being inside a school for the hour it takes during school events. No one has any manners anymore.

And, of course, the corollary: you're competing against junk and trying to compete with their pricing, so don't act shocked when your product is automatically lumped with the worst of what's out there.

Totally agree... i think the issue i've personally felt is the "longevity" end of internet marketing, developing new tools/things for onliners, is to never give up / cave to the whiners - who always want it more featuresque (than functional), more tools (than they can even use) at the cheapest possible cost (minus $10 more dollars).

Though not rich! ... Keeping to those scruples and invoking the "still in business years later" factor [which is a huge one btw] my prices have (if anything) gone up over the past 2 yrs - embarassingly so. My stress however has dropped to 'nil.

(true story - i triple-charged for a product I was selling for peanuts, and literally tripled the sales... and reduced my helpdesk ticket overload from 100 emails and 50 tickets+ per week, down to 'nil)

Point being... when price is the only commodity someone is leaning on there is a *true* absense of value (inherently) within the product itself. The same is true vv.

This really hit me. Eureka! Thanks!

If a product doesn't sell at $47, but makes regular sales at $37, it makes no sense to just drop the product and move on to something else that also might not sell at your preferred price, especially when we're talking about digital products.

Lowering prices is fine, to a point. Just because you prefer a certain price doesn't mean it's the correct price.

I actually see this analogy with HP's firesale.

Our entry level product is $997 and it goes up from there. But we target customers with money and help them make more. For example, one of our target markets has always been offline professionals and businesses. We were doing offline before most people on the WF ever heard the term (since 2003.)

The WSO forum seems to me to be basically price driven. I've bought quite a few things there - mostly PLR - and have been happy with it. But Lord, some of the questions, quibbles and complaints I see. The small-minded doubts, worries and hesitation over $5, $7 or $10 products is just amazing to me.

And the demands! People want the sun and the moon, private consultation, do it for them, guarantees it's gonna make them rich by 4:30 tomorrow ... everything for a couple of bucks.

If you want those buyers, feel free. Not for me. Never.

Most of the WSO's are glorified forum posts. It's not uncommon for someone to make a good post and someone chime in "Hey, That should be a WSO!". If that's the quality you can expect, then $5 is probably about the right price.

And to be honest, I don't even know if most people that are selling WSO's are capable of producing a $97 product.

Look outside the WSO forum. I bought SEO Elite in 2006 for $150. It now sells for $167. He's tested monthly payments for that product, so I would assume that he's able to make more by selling it as a one-time payment. That product has gone through several BIG updates for no charge.

I consider SEO Elite to be an excellent product, has an excellent sales page, and has great bonuses.

Dropping the product is not the only option if it won't sell at the price you want to make. Dropping the price should be the LAST option on the list, possible ONLY after you have tried the following, one at a time:

1. Changing the story.
2. Adding more perceived value.
3. Adding more actual value.
4. Trying a different market.

Then MAYBE think about dropping the price, or making a new product more in line with what you learn from the above process. The thing no one addresses is what happens to public perception of your brand and your product when you publicly drop your price. What do you think that says about any claims you made about its value when you tried to sell it for more?

The numbers are a diagnostic symptom. Other businesses may be different, but when you sell info and other things with an ambiguous value, there is no concrete truth to the market. Price can be justified entirely by story, and bad numbers don't mean "will never work" - that's not to say sometimes you won't decide to jettison it anyways, but it's not JUST numbers.

Similar info may be available elsewhere. So what? You can buy a poster of a painting you like, but that's certainly not the same as buying the original painting from the artist. Or even a limited print run of the painting signed and numbered by the artist (in case anyone wants to say 'oh a painting is unique!!!'). The reason you can justify selling a $47 ebook is because you CAN'T get THIS info FROM ME in THIS FORMAT anywhere else on earth for any other price. That NEEDS to be part of your story if you want to create any perception of value.

As for the last bit about income reflecting value given - it's not the value you give, because value is relative. It's in the perception of value you can create in the buyer's mind. This is something you CAN control. Pricing is just one way you do it.

This is probably the most useful post in the thread - this is how you create value in a market place that low-price-focused competition can't compete with. The ONLY way you can survive in a race to the bottom is by cutting quality to match the return. You can't duplicate personal interaction and guidance with an outsourced two page report. They would go broke trying to undersell you, and with the low prices they charge, they can't afford to deliver the same value. You win.

You are. If it's converting 0.25% at $97, do every conversion boosting thing you can. If SOMEONE is buying at $97, MORE people will, too. You need to figure out why you're not successfully making the case to more people. You MIGHT get a better conversion with a lower price, but that's lazy marketing. You'll get maximum conversion if you lower it to free, but that's not good business. Also, if you have a product with a value that's so flexible that you can drop the price by half with no second thought, maybe the product wasn't really worth $97 to begin with.

Did you know that there have been psychological studies done that show people ACTUALLY, physically and chemically derive MORE enjoyment from things that they believe were more expensive? High prices not only increase the PERCEPTION of how good your product is, they actually INCREASE how much someone is capable of enjoying them. Prejudices affect perception and perception affects reality. Yeah, there CAN be good quality for a low price. But good quality for a high price is better.

This shows you have nearly zero understanding of actual buyer psychology.

When you're building the actual hot rod, does the amount of money spent on quality parts vs. cheap parts also not matter? Are the cars built out of shoddy Chinese mass produced garbage metal going to be as sought after, respected, cherished, etc.? I doubt it.

Inexpensive = perception of low quality before the purchase is even made. This prejudice has been PROVEN to have an effect on how the product is judged by the purchaser.

I didn't want to quote it all here, but great post!

Which books make more money for the publisher? The paperbacks, or the hardbound first editions that are more expensive? Even though they are EXACTLY the same content, why do you think the hardback comes out first in a more expensive format? Think.

I agree with this. But not a lot of the rest, lol.

Yes, your business may be an exception, but I promise it's not common. Here's the thing - really pricy stuff attracts a quality customer. Meet their expectations, and they don't refund. The lower you set the price, the lower-the quality of customer and with that, perceptions and expectations can change.

If you are deliberately aiming at the lowest-price shopper and you hit them with a medium-to-high priced product, they are UNCOMFORTABLE paying that price and have a high occurrence of Buyer's Remorse. If the price is high enough, or they can get a no-hassle refund, they WILL get their money back. If you price it LOW enough, they won't bother and say "meh, just $5..."

But while you DO get to keep the money, and DON'T get a refund, that's still not a positive impression to leave your customer with.

"Harder" is relative. You have to have specialized knowledge and capital to be able to scale large enough to be profitable on volume vs. charging a premium for quality. This is exactly why a mom-and-pop shop get squashed by Wal-Mart because they don't have the resources to profit on volume even if they knew how.

In info marketing, it's the same. It's a LOT harder for any solo-entrepreneur to set themselves up for profiting by volume when you're starting out than to establish expertise and charge a lot for scarcer products/services. If you want to THEN take that capital and get some knowledge on how, you COULD invest on scaling it upward. But you can't say that the easiest thing for some beginner to try is to go straight for a volume business right out of the gate, could you?

You said earlier that low price = higher volume, so by your own definition, this would lead to more support. More support means higher cost. And you said cost-per-incident is reduced gradually if support is well organized, but for the marketer trying to dive right into this "business model", he's quickly going to be overwhelmed with more support than he can handle, and the sharks will begin circling. It happens in a lot of WSO threads I've looked at, especially when people try and do SERVICE at a hugely discounted rate.

You may be an outlier, but you have a well developed business with lots of things in place that have paid for you to solve these other problems. It doesn't mean they don't exist - it means you can mitigate them in a way that 99% of people won't be able to replicate. At least not until they reach stability.

I agree that this is a myth, though for a different reason than you. If you're talking information-selling or any other malleable-value product, it's only seen as a commodity by the market if the seller treats it that way. You create the perception - there's no hard supply/demand in IM because you can create demand out of nothing and if you position it right, you are the sole supplier of every product you produce.

This is really just semantics. You are selling more stuff to the same customers, you're just changing the interval from "right after the sale" to "a while after the sale". If you're not doing SOMETHING to follow up the first low-price sale with something that will get you more cash from that prospect, you have to sell a ****LOAD of front-end loss-leaders to stay in business, right?

Big ups to you for qualifying this - you must admit, the business you have developed is a fairly unique one in this marketplace. I think a lot of your success comes from the fact that you have little conceptual competition. People buy your stuff because you are Big Mike.

It can be as profitable, sure. I still disagree that it's not a lot harder for most people to do what you've done, because it took a lot for you to get in the position where you can offer what you offer for the price you do.

When you're looking at a street lined with lemonade stands, all selling at $0.50 a glass, your average WSO seller is saying "****, I want in on that!" And they open up their own $0.50 lemonade stand. What you are saying is that yeah, that can be profitable if you're set up to give them a sandwich too and can handle 1000 customers a day. I'm saying it's a lot easier to just open up a "Super Lemonade" stand and charge $1.00 a cup because you put a fancy straw in it.

You can build your business out of the exact same materials and the exact same infrastructure, you will make a lot more and then down the road, they can decide if they want to morph into your kind of business.

----

My pal Andy Fletcher pointed out a discrepancy in my last post where I told him you have the problem with people making $97-value products and slitting their own throat to sell it at $7...

Then later I told Alexa that the droves of $5 garbage make it easy to stand out. So are the cheap products under-valued or are they garbage?

To clarify: The fact is there are two groups here. The first that I was talking to Andy about are the consumers of WSOs who are the ones trying to learn and do and set out to sell their own WSOs. They do what they are told and provide massive value for little return. This is a sucky proposition.

The kind I was talking to Alexa about are the ones who prey on the previous kind of seller. Either they come in from outside to sell them crap because hey, they're buying! Or... even worse... the first kind morphs into the second kind, because instead of selling their products for what they are worth, they just reduce quality on subsequent products in order to match with the return they can get at the price they think they MUST use...

And let's not forget that regardless of what your product's value is BEFORE you put a pricetag on it, the second you stick a $5 sticker on it, it is IDENTICAL in value to every other $5 product in that market because they HAVEN'T bought it yet. Chances are, a crappier product from a crappier seller will have lots more aggressive sales tactics, and they make you look lame by comparison.

It's true low price is not a measure of quality, but low price is an indicator of POSSIBLE quality that the prospect relies on before they even decide to buy.

With respect, I don't sell ebooks.

And I get your point. Yes, people will pay for asolution handed to them on a platter. This is the main reason why people pay for stuff that is available for free.

Also known as the 7/11 rule of marketing.

The WSO is a microcosm and reflection of the world at large. People are becoming more price driven. That's free market competition.

You want the benefits, you suffer the pitfalls of a free market economy.

Competition will always produce something cheaper than the person before.

So I don't see it as making a rod for our backs. What's dear today will be cheap tomorrow. Hence my reference to what gurus sell from the stage.

Everything evolves. And we must also evolve our products and value... or get left behind with the competition.

On a final note, one big winner for me is by taking an ebook and converting it into a training program. This has enabled me to increase profits of a product by 400%.

People want tour guides... not just tour maps. Given the option, they will pay for the guide, but wont pay much for a map because they can find them for free at a tourist kiosk.

So be the guide, not the map producer.

Best,

Sal

I completely agree with you here but the issue that has come up is that
there are less and less number of buyers who are ready to pay $100 for
a product (and I'm talking about the WSO Marketplace here) and this is
only because there are other similar WSOs selling for a 93% lesser price.

Some sellers are only forced to price their products less just because there
competitors are selling for such cheap prices...

Is it not possible to put up a "price-check" moderation on the WSO
marketplace to stop whats happening to the market?

Robert you are correct here, although it was a WSO that prompted me to write it, but the point is valid across the board.

However, the content of this thread is worth a round-table discussion all on its own!

Richard, I did have in mind at the time from a buyers POV, but now looking over all comments I don't think it matters any more.. .the results stand on their own.

As for you many other *very* well thought out replies - thank you. I'm still going through them.

I'm definitely going to print this out and perhaps make comment on all of it for my MSU members - it's a topic that deserves serious thought for those of us who want to be in business for the long term...

And I guess that was what's in the back of my mind at all times; and it's been said a few times earlier; Robert pointed it out well.

It's pretty damned hard to make a solid living off dime-sale products! I know there are some out there who do it, but they are the few. Then the newbie comes into the market and wonders why he / she is struggling only making a few bucks profit of each sale....

Ouch.

It's like the business whose sales are dropping and thinks "if I cut my prices more people will buy"... No!! If you cut your prices you'll make less profit! This would only work if they "cut prices + reduced overheads + increased sales" - price cuts alone don't save a business, they're the death knell.

Yet for so many of us, FEAR drives us to it.

Ugh, makes me shiver!

Another point worth discussion... many people wonder why their "product launches" fail - simple reason, their price point was too low and "major affiliates" don't want to bother with low commission sales.

Yet another reason to put prices up.

Amen! I'm hearing the hallelujah chorus playing somewhere in the background!

Paul

Suellen, there's really only one way to find out for sure, right?

While I've yet to run a WSO, if it shakes out anything like the real world, some will buy the more expensive product later, some won't.

And even if they buy that second product as a low-price WSO, if they buy it from you, they just doubled their lifetime customer value. How many Warriors end up saying "I buy anything he/she puts out because I know it's going to be good"?

Suellen, thanks for sharing your opinion.

Most of those $5 to $7 products tend to be followed up by an immediate upsell (OTO) which tends to be $17 (it varies) as we know OTO sells quite well here.

Once the buyer is in our list we know a little bit more about him/her than we did before. We know that he/she has the ability and means to pay. I mean he/she either has a credit card or a paypal account.

With this information I know that I don't just have a freebie seeker, I have a buyer. This customer is more valuable to me than the prospects in my list who arrived on my squeeze page and entered his/her name and email address in exchange for a free ebook/information and never bought anything from me!

The next step is developing a relationship with that list through value and education... In the process I will definitely make some more product recommendations to help the customer learn more in order to grow his business to another level. The responsive ones will end up signing to my coaching programs or to referred coaching programs and so on. Not all customers will join but those who do will make the all process worth the while because it's all about the intrinsic value of a customer. What started with a simple $5 to $7 can lead to thousands in profit.

We use the same strategy when we organize seminars. Most of the seminars that I and my tem organize are free. I know that most of the attendees will be freebie seekers but I also know that among them will be people who are seriously looking for value. This minority make it all worth the while. Why? Because they don't only buy products but they also end up subscribing to our coaching programs, paying us thousands in the process. All we have to do to have valuable customers, is repeating the process...

What I'm trying to say is, it's all a matter of perspective. Not all of us have to do business the same way!