One of The Biggest IM Misstakes I've Made....

Underpricing
You may naturally assume that to make something sell quickly, you want to price it as low as possible. After all, the laws of economics state that the lower the price, the higher the demand, right? Well, sometimes that's true. But not always. In fact, lowering your price tremendously can actually have a detrimental effect on your sales. Why? Because many people equate "low price" with "low quality."

Think about it. You are headed out to the store to buy a piece of jewelry for your spouse's 10th anniversary present. You know it'd better be good, or you're going to suffer. The jeweler pulls out two necklaces, which look pretty similar. One has a price tag of $15; the other is ten times as much. Which do you choose?

If you were evaluating coffee mugs, you might immediately go to the lower-priced option. It's much closer to the price you expected to pay. But with jewelry, you'd likely think twice - or more - before going cheap. You'd worry about the workmanship. Would the clasp break? You'd worry about the materials. Would it turn your beloved's neck green? You'd worry about its provenance. Was it stolen? The worries aren't worth the lower price, so you scoop up the more expensive necklace, have it wrapped in a gorgeous blue box with a white bow, and proudly present it to your loved one. Crisis averted.

The truth is, we rely on price as a signal of quality. If a leather jacket costs $1000, we assume it's better made, more fashionable, and created with more care and attention to detail than the one that costs $100 at Joe's Bargain Basement. We don't know for sure, but we assume it's true. The same goes for information products. If an ecourse on diabetic cooking costs $1.99, we assume it's not as valuable as the one that costs $19.99 or $199. Sure, not everyone can buy the $199 course, but most people would agree that it's probably a "better" course than the one that's 1/10th the price.

So when you're pricing your information products, don't automatically assume that lower price = more buyers. In fact, many businesspeople have noticed their sales actually INCREASE when they raise their prices! Yes, extra income for the same level of work. Why not take advantage of it?

Still not sure where to price your product?
Do research on what your competition is offering, where their price points lie, and compare your product to theirs. If you offer more value, personal interaction, a better guarantee, then price higher. If you're offering a shorter course or less value, price lower.

You can also try several different price points to see which one converts the best. But remember - one sale at $199 equals ONE HUNDRED SALES at $1.99. And if you've got the value to back it up, it's probably a lot easier to get that one, higher-priced sale.


It would be interesting to hear how other warriors "approach" the under/over pricing dilemma.

/Izerman