A "cheaper" product means broke people will buy it, complain and request refunds?

6 replies
I have two very conflicting opinions on product pricing for ebooks from 2 reputable people - both good web designers.

I met these guys at a marketing seminar on the subject, and thereafter got coffee with them individually in the city; they both are "small ebook" authors and I tried to extract opinions on pricing.

One of them is all for selling "reasonably" cheap, inexpensive ebooks i.e. less costly than most of the competitors. He said selling an "expensive" product means standards have to be incredibly high, but for the same income (higher price but less sales).

The other guy said never ever sell low cost ebooks because people who are looking for a bargain, who are broke or close to broke, who are cheap skates etc. will make up 50% of your customers and cause hassle - give bad reviews, look for refunds - etc.

I'd appreciate your 2 cents on this, thanks.
#broke #buy #cheaper #complain #means #people #product #refunds #request
  • I sell both cheap and expensive products hundreds of them over the years, my general opinion is more of my customer support has gone on inexpensive but on the same token I sold so much more of the cheap products and services and less of the expensive. So it's hard to say for 100% certain, but I think it's a mistake not to have cheap stuff to get people in because alot of my best customers have bought a cheap product from me end up buying more expensive products and services once they realized I"m a real person and this is a easy way to test and once In a while you get a very very difficult person who pays a few dollars and demands one on one consulting and when he/she doesn't get it demands refund and threatens to post on rippoff report but it's very very rare. I'm for inexpensive product and you can always refund the customer in my case it's around 1% which I'm happy with that rate I have friend their refund rate is over 3%. My charge back rate is below 1/10% and 0 for hight ticket products. Not sure if this helps but like I said I would go for both.

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  • Profile picture of the author Raydal
    I think that WalMart has more returns and complainers than Macy's but
    they both seem to be doing fine. So they are both right. You have to decide
    on which end of the market you feel most comfortable serving.

    -Ray Edwards
    The most powerful and concentrated copywriting training online today bar none! Autoresponder Writing Email SECRETS
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  • Profile picture of the author cuie
    It depends. Like everything

    I believe in numbers, so you should test it out.

    Have learned that cheaper (but not too cheap) is the best. Why? Because refund rate doesn't increase that much when the price drops. But at the same time your sales increase.

    For example:

    1. Product A ($67): refund rate 3%, sold 100 units => $6,499 revenue
    2. Product B ($17): refund rate 7% sold 500 units => $7,905 revenue

    But you have to test it yourself.
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  • The first guy who is okay with selling cheap eBooks has a good point. The money in cheap eBooks is selling to a much larger pool of people who are willing to pay a smaller rate. As opposed to higher end eBooks which would sell to a smaller pool of people willing to pay the higher price. His reasoning is solid.

    The second guy however is just ranting about one specific part of eBook sales that can be applied to both higher end ebooks and cheap ebooks. The amount of customers who ask for a refund, leave reviews, and "cause hassle" is based on your presentation of the product and your handling of the customer as they buy your product.

    I've sold cheaper eBooks before and what I do is quickly address the majority of issues with a customer by giving them a refund and being understanding and kind with my replies back to them.

    You have to think, the money in cheaper eBooks is in the number of sales you make. So if you make 150 sales in one month, and you receive 20 customers who seem to have an issue and refund them their money. You will have 130 secure sales and be pretty safe that you will not be hassled and people will not feel the need to go out of their way to place a negative outlook on your business.
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  • I have tested EXTENSIVELY on price points, and pricier levels ALWAYS bring lower refund rates.

    The same applies for payment plans: if you offer a product at both A) $297 and B) 3 x $97, the latter will pretty much always bring higher refund rates.

    Why? I guess bargain-hunters are more prone to change their mind about their purchase.
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  • Profile picture of the author WillR
    My experience has shown that the less you charge, the worse customers you attract. They are the ones that refund, expect endless support and hand-holding, and are basically your biggest drain on resources.

    Up your prices and you'll up the quality of your customers.
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