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How do you set a price for your product?

by substance
16 replies
How do you decide on the final price for your end product?
Do you take into account all the cost of production like outsourcing , your time, copyrighting, value of the product, etc. or..

If it is health niche, how much is considered okay for a "problem solver kind of ebook"?
Also IM products? Software?

Also how do you decide on the affiliate percentage? What should be the "deciding factor"?

Thanks for the Comments!
#price #product #set
  • Profile picture of the author jpsween88
    I would check and see what your competition is charging, but if its a brand new service perhaps starting off at a lower price and gradually raising it closer to the compeititions price may be best.
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  • Profile picture of the author drewfioravanti
    You test various price points and use the one that has the biggest net profit.
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    • Profile picture of the author answerswipe
      Pricing is one of the most difficult problems to grapple, especially when you have something completely new and it doesn't have any competition. The correct answer is to charge "the amount that gives you the maximum amount of profit." So your question should be: "How do I figure out the price that gives me the maximum amount of profit?"

      Like drewfioravanti said you need to test different price points to figure out what that amount is. One thing you don't want to do is A/B test your traffic and charge some customers X and other customers Y.
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  • Profile picture of the author Greedy
    I start low, then slowly raise it.
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    • Profile picture of the author John Romaine
      Originally Posted by Greedy View Post

      I start low, then slowly raise it.
      This is what I do. It works well.

      Alternatively, if you don't want to implement a low pricing point, pick a pricing point that you'd prefer and value add the hell out of your offer to get it moving.
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  • Profile picture of the author Razvan Rovinaru
    A product is usually worth as much as people are willing to pay for it. With that in mind though, you also need to always take into consideration the time(and money if any) invested in its creation, and the amount of sales you expect to be making come launch day.

    If you unsure what to charge for a certain product, it's always best to look at what others are charging for similar products that seem to be doing well. Make sure you offer the same type of value or even more if possible to justify charging a similar price!
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    • Profile picture of the author PeterKnight
      There are so many variables that go in to this. So much depends on your market, your offer, customer expectations and the setting in which you present the offer. You can sell the same product for a higher price under the right conditions, just look at how cinemas sell drinks and snacks for ridiculous prices. So I don't think a one shot answer is possible not even if you narrow it down to niche, product category etc.

      I will say one thing, just looking at the cost of creation and setting a price from that does not make sense. Similarly, looking at the competition and setting your price based on that doesn't make sense either.

      You absolutely need to know how much costs you are making to create whatever offering you have. That's the only way to know if the business model stands up to scrutiny in advance. And sometimes things won't add up. If you have a lot of competition in the market with a pricing race to the bottom, or the competing products are already meeting customer expectations at low prices, there's no point in competing at the same price point, especially if the margins aren't good.

      I've made this mistake a lot, because it's so natural to do. But once you start going over the numbers, it changes your thinking.

      Right now I have a WordPress plugin almost ready to market that has a pretty low ceiling in terms of overall sales - it would do well to make 10k+ (based on other seller's successes). While I built it initially for my own sites, if I had to translate the development costs, it would be 5k+. The more the plugin sells, the more support costs I will have so really the room for a nice windfall is pretty limited.

      If I factor in support and true value, I would have to sell the product at a relatively high price when compared to similar products on the market. That precludes me from using existing market places like CodeCanyon, which has a built-in audience.

      So for my product to make sense on business level, I have to use it creatively. Right now I'm thinking it of more of a list builder, but I'm also considering different pricing tiers so I can turn a profit. Or I might tweak the offer, aim at a different audience etc.

      So basically, I'd say, go over the numbers and don't trap yourself into preconceived notions about what the price should be based solely on x or y, look at the bigger picture.
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  • Profile picture of the author nitesh
    Price for any product should be set above its cost but for eproducts such as ebook price should be set something as

    Price = (Total Cost + Desired Profit) / Expected Sales

    Am I right in this formula? Please give your ideas.
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    • Profile picture of the author GlenH
      Just on the issue of price..(and please don't laugh) is it still the mantra, that conversions will be better if your price ends in a '7' :rolleyes:

      For me, my conversions are better if my prices don't end in a '7' or a '9'
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    • Profile picture of the author ryanmilligan
      Banned
      Originally Posted by nitesh View Post

      Price for any product should be set above its cost but for eproducts such as ebook price should be set something as

      Price = (Total Cost + Desired Profit) / Expected Sales

      Am I right in this formula? Please give your ideas.
      I use something kind of like this.. But then I'll drop the price down a peg so that people class it as 'over delivering'
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      • Profile picture of the author JohnMcCabe
        You also have to consider your positioning.

        If you want to be "the low price leader", you price just under your competition. The danger is getting involved in a race to the bottom.

        If you don't want to mess with testing, pick a price in the middle of the pack and run with the crowd. The danger is having to settle for too small a piece of the pie.

        If you want to be the premium provider, set your price significantly above your competition and don't apologize for it. The danger here is that you have to live up to your positioning. If you can, the payoff can be, shall we say, significant...
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  • Profile picture of the author WeavingThoughts
    1. Split testing

    2. Price of similar products, just slightly lower than them

    3. Minimum to make reasonable profit
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  • Profile picture of the author MarkBrook
    Personally I have lunch an product I mean an E-book for affiliate market in starting I give my book to free for first 10 person than on 50% price for next 20 person than I rise my price at actually I want. But it takes some time as I have to watch the trend of users and there likeness.
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  • Profile picture of the author Rod Cortez
    Originally Posted by substance View Post

    How do you decide on the final price for your end product? Do you take into account all the cost of production like outsourcing , your time, copyrighting, value of the product, etc. or..
    As you can see from the varying answers in this thread so far, this is a very general topic with a myriad of factors involved. Entire books have been written about pricing a product.

    Some of the factors involved on the market you decide to enter, what kind of product and/or service offerings you will be providing, what the competition is charging for something similar, your costs, your staffing and other expenses, your margins, economic environment, elasticity of your offering, etc.

    If it is health niche, how much is considered okay for a "problem solver kind of ebook"? Also IM products? Software?
    For starters, there is no such thing as the health niche. A niche is a specialized market with specific needs. Like there's no such thing as the car "niche", but there is a car market with hundreds, if not thousands, of niches and even more sub, or micro-niches.

    When you write "health", what are you referring to specifically? Is it how to lower your blood pressure? Is it how to get rid of acne or skin blemishes? Is it how to get rid of Tinnitus? How to reverse type II Diabetes? How to cure a stomach ulcer? How to relieve pain for erosive esophagitus?

    After years of studying pricing both at a university and in real life, I've found one of the most effective ways to do this is to test different price points. You can do this any number of ways. Some people set up different web pages, buy targetted traffic, and then use a script to rotate them OR they just send traffic to each different page and write down their metrics.

    These tests could last a few days or even a few months. It all depends on how much data you need.

    Also how do you decide on the affiliate percentage? What should be the "deciding factor"?................
    This would depend on your actual affiliate strategy. For example, one product creater has a $19.95 e-book, but pays affiliates $39.95. Is he insane? No, not at all. He uses the price point as a loss leader to get people to buy his lead product and get them into his autoresponder series of 1 to 2 email messages per week.

    He is able to pay $39.95 per lead each affiliate gets him because he has an extensive back-end product strategy. He offers DVDs, streaming videos, and even specialized seminars. His products aren't cheap, but they provide a lot of value and they each solve a very specific problem in the market he is in.

    If you only have one product then it would be silly to offer more than 50%, if that's what the numbers say. Which is why if you start off with one product, you want to find out as quickly as possible if it will be profitable. If you can break even with it, even by offering a 50% commission then you know you can bust out some more products (and offer other people's products too).

    This is why list-building is incredibly important. It's where most of the money is made.

    RoD
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  • Profile picture of the author DaveMeade
    Originally Posted by substance View Post

    How do you decide on the final price for your end product?
    Do you take into account all the cost of production like outsourcing , your time, copyrighting, value of the product, etc. or..

    If it is health niche, how much is considered okay for a "problem solver kind of ebook"?
    Also IM products? Software?

    Also how do you decide on the affiliate percentage? What should be the "deciding factor"?

    Thanks for the Comments!
    As has been mentioned already test test and test! now with the health niche, you have to think in the shoes of your customer someone with a big ass problem isn't really worried about price as they are a way to eliminate the problem.

    people focus on price price and price where as you should be focused on creating the best offer you can in whatever market your involved,

    I'm not saying that price is unimportant, what I am saying is that your focus should be on solving your customers problem, in many cases their motivation is not strictly on price but rather finding a solution to their problems,

    For instance say you have sciatica and are suffering day and night with ecrutiating shooting pain, are you thinking hmm whats the cheapest price I can get for this product? or is the number one concern in your mind, I want this pain gone NOW, I just want something that will REALLY work. regardless.

    focus heavy on building a good offer that instills trust and confidence in your product, offer a price that is competitive with your competitors and than scale it up until you reach the optimum price point,
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