Can You Price A Product To Cheap ?

by LXR
19 replies
When your client base income is 6 + figures a year, can you price your services at such a low price that it turns off potential clients?

On one of my sites I started providing services @ $49.00 per year.

The first year I struggled to find new clients.

I was actually about to give up on the site and thought what the hell, and increased the price to $149.00 per year .

I have gained 4 new clients in 6 wks at that price point.

I am wondering if I am still to cheap.

This is a niche site and googie is charging from .40 to 2.50 per click on the googie ads I have running on the site.

My clients are averaging 2 + clicks per day.

If my clients obtain a customer from my site, it is worth a minimum of $1000.00 to them.

Can not charging enough drive down sells, and how does one determine the actual value of what your services are worth ?
#cheap #price #product
  • You are asking a question that most vendors ask when they do not "split test" their pricing.

    Set up a few different price points on separate landing pages, etc, and then drive traffic to them. One of them will come out as the winner. It's really that simple. And yes, you can price a product or service way to too cheap, and in most cases it could then be assumed to not be as high quality as your competitors.
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  • Profile picture of the author kayfrank
    I believe you can charge too little that it puts people off. Its just the same offline - a cheap TV is not going to provide you with the quality of a more expensive TV.
    Pricing is a difficult topic in many ways. You have to test your own market - I know that doesn't really help you does it? :-)
    Your client base are big earners so they aren't going to looking for cheap! They will be looking for the best price for the best quality - there's a difference.
    If you were providing clients with customers on a commission basis you would be getting a percentage per customer. You are charging per year for a service.
    I think you would probably earn more if you were using a commission structure.
    You have already shown that charging more gets you clients - increase again and see what happens. Go to your existing clients and ask them for feedback - offer a variety of packages with price points and see if you can come up with a more realistic pricing structure.
    1. Find out the average going rate
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  • Profile picture of the author garry6767
    Yes, you can because people will think if it is too cheap it is not quality. You should just price the product according to what the market says it is worth and maybe even try to price it a little higher to see what happens.
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    • Profile picture of the author LXR
      I am honestly thinking I may need to double the price from $149, to like $299 per year.

      One of my newer clients has been on the site for 38 days.

      He shot me an email yesterday letting me know that yesterday he received his first client from my site and that he is extremely happy. The one client was worth the $149 he had paid me.
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  • Absolutely. Set your price point based on the value it offers, and you'll do well. People who are looking for quality will pay for it. Those who just want cheap won't be as willing to part with money anyway.

    Good luck!
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  • Profile picture of the author popstocks
    Banned
    go for $1k+....don't get bogged down with the i.m world where cheap is best
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  • Profile picture of the author carcin0genic
    Value is perceived. If you value your time and have enough confidence in the product you spent your time creating then you price it accordingly.

    Pricing yourself too cheap tells the customer they should expect that amount of value from it. If I gave the same e-book a different title and sold each one at 2 price points on completely opposite ends of the pay scale not only would I sell more of the higher priced one, those people would take the information more seriously, apply it faster, and return every time I put out another product.
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  • Profile picture of the author WillR
    You can price a product too cheap or too expensive. Many marketers have done proper tests of price points and often find weird results such as increasing the price resulted in more sales.

    The only way to know for sure is to test different price points with your own market. Each market place will react differently.
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    • Profile picture of the author PCH
      It's always a great idea to split test. But there's definitely a psychological factor involved in pricing something cheap.

      I recall a long time ago, an interview by a BBC Reporter questioning a Knightsbridge store owner about the exorbitant prices being asked for the goods in his shop.

      His response... "The more we charge for this stuff, the more people seem to want to buy it". And he alluded to the supposition of quality coming along with a high price.

      I'd bet he knew exactly what he was doing too. So there's absolutely no reason it wouldn't be worth a try with online stuff.

      Hope this real world example helps
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      • Profile picture of the author Paul Langham
        Originally Posted by PCH View Post

        It's always a great idea to split test. But there's definitely a psychological factor involved in pricing something cheap.

        I recall a long time ago, an interview by a BBC Reporter questioning a Knightsbridge store owner about the exorbitant prices being asked for the goods in his shop.

        His response... "The more we charge for this stuff, the more people seem to want to buy it". And he alluded to the supposition of quality coming along with a high price.

        I'd bet he knew exactly what he was doing too. So there's absolutely no reason it wouldn't be worth a try with online stuff.

        Hope this real world example helps
        Yes this is a very interesting example, I have often wondered how it is that people can for example buy a pair of shoes for 100 pounds and others will pay 1000 pounds - there can't be so much difference in the quality, well certainly not ten times.

        I witnessed young Asian girls in London during this years' winter sales grabbing at the expensive end of the shoe market,like someone who hadn't eaten for weeks.

        Likewise there was a story about Jaguar seriously increasing the price of their new model when it wasn't going well and sales doubled.

        Seems like people will automatically think 'quality' if an object is priced much higher than the norm.
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        • Profile picture of the author LXR
          So, I figured what the heck.

          Those who do not try are doomed to fail.

          Those whom fail, learn. (sometimes not lol )

          I have increased the price to $199 per year and just launched
          a targeted FB campaign with $100 budget.

          If it cost me $100 to land just one client....... its a win .
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  • Profile picture of the author automationhero
    There's a company that I know of that started out selling SEO services to dentists for around $70 to stand out from the competition. They struggled for the first year and almost shut down.

    They then raised their price to $250 then to $400. Each time they raised their price they had a flood of new clients because their services were seen as 'valuable'. It's sometimes hard to create value when you're charging so little.

    They now charge around $800 per client and are valued around a couple hundred million. So take a look at who your customer is and what they would be willing to pay and what price point they feel would be valuable.
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    • Profile picture of the author LXR
      Originally Posted by automationhero View Post

      There's a company that I know of that started out selling SEO services to dentists for around $70 to stand out from the competition. They struggled for the first year and almost shut down.

      They then raised their price to $250 then to $400. Each time they raised their price they had a flood of new clients because their services were seen as 'valuable'. It's sometimes hard to create value when you're charging so little.

      They now charge around $800 per client and are valued around a couple hundred million. So take a look at who your customer is and what they would be willing to pay and what price point they feel would be valuable.

      I'm thinking this is part of my problem, that I am just under pricing my services.

      I now charge $149 for the first year, then allow them to renew for $79.99 per year thereafter. My original goal was to get 1000 clients eventually paying $99.00 per year on a continuing basis.

      In December of last year I contacted an existing client about renewing her subscription on the site. I talk with her on an ongoing basis throughout the year, just chit chatting etc. She told me then I was under pricing my service and that it was worth $99 per year for her just to have a link on my site much less a full page advertisement.

      I responded to her that I was afraid if I raised my price others would not sign on.

      Her response was if they did not sign on at the current price at the time that they were just cheap and that more than likely I did not need those type people as clients anyway.
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  • Profile picture of the author gcbmark20
    Hi,

    Do you even have enough funding available to be able to split test and be in
    a loss until you find what price points work best for your offer?

    There are other ways of course.

    You could add your leads into an email database and ASK THEM what they
    want, what their needs are.

    Collect your data that way and then create a LASER TARGETED product
    or service that they actually want.

    Of course this isn't to say that this way IS the only way.

    IT ISN'T.

    But everyone comes into this game with different strengths and weaknesses.

    Some are time rich and money poor.

    And of course the other way around.

    So, you need to decide what you're comfortable with and the BEST
    possible route you could go down right now for your business.

    1 SIZE doesn't necessarily fit all.

    But 1 size could eventually fit anyone's needs at different times in their
    journey.

    What's the BEST FIT for you right now?
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    • Profile picture of the author LXR
      Originally Posted by gcbmark20 View Post

      Hi,

      Do you even have enough funding available to be able to split test and be in
      a loss until you find what price points work best for your offer?

      There are other ways of course.

      You could add your leads into an email database and ASK THEM what they
      want, what their needs are.

      I'm also thinking I may not be advertising the site to potential clients enough.
      I spend about $25 per FB ad via impressions.

      Collect your data that way and then create a LASER TARGETED product
      or service that they actually want.

      Of course this isn't to say that this way IS the only way.

      IT ISN'T.

      But everyone comes into this game with different strengths and weaknesses.

      Some are time rich and money poor.

      And of course the other way around.

      So, you need to decide what you're comfortable with and the BEST
      possible route you could go down right now for your business.

      1 SIZE doesn't necessarily fit all.

      But 1 size could eventually fit anyone's needs at different times in their
      journey.

      What's the BEST FIT for you right now?
      Running ads at this very moment on FB for split test.

      The site is about as targeted as it can get.

      Ranks Pg1 of all major search engines under about
      70 different keywords. My rankings are of a natural nature.
      I have never paid to advertise the site via PPC etc.
      However those keywords are more targeted to my clients customers,
      than to my clients. Hope that makes sense.
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  • Profile picture of the author leisurexperience
    Price must be set competitively. Use Benchmarking pricing.
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  • Profile picture of the author lotsofsnow
    Here is what I would do:

    I would do a test. Create let's say 2 or 3 different price points and then use Google Analytics
    to do split testing or A/B testing.
    https://support.google.com/analytics...c=1745207&rd=1

    After a while you will know exactly what brings in more revenue.
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  • Profile picture of the author hustlinsmoke
    I would always start cheaper than higher. I hate that word also lol degrades my products.
    I always tell people start lower than you think and lower than the competition, it is easy to raise the price but if you have it to high and you have all these clicks there not coming back when they see the price but they may come back if its too cheap.
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  • Profile picture of the author Jeffery
    Price a product for free and see what happens. There is a book by Chris Anderson titled "FREE: The Future of a Radical Price" and it is a good read if you are a price tester. He writes about some well known marketers and the results when they priced a product for free. Interesting is that "Jell-O" was once free but look at the price now.

    Jeffery 100% :-)
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    In the minute it took me to write this post.. someone died of Covid 19. RIP.
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