How Do I Price My Products & Not Give Things Away?
By: Sandi Krakowski
When you first start out in business it's important to make sure that your offer and your pricing are both competitive and delivering high value. If your perceived value is too low, by being underpriced, you'll lose sales. If your perceived value is unbelievable, you'll lose sales as well. Today, let me help you set pricing correctly.
What is your ideal price point?
As you price your products take three things into consideration:
#1- What is the price my competitors are offering
#2- How much do I want to earn on each product
#3- How can I be competitive
If you are selling an information product be careful to not overprice or underprice your items. Some of my coaching clients have come to me wondering why they couldn't sell their eBook. Here are some findings that will help you-
One client was selling 32 eBooks per month. At $ 29.95 per book and hardly any overhead at all, he was earning $958.40. But when their sales began to drop and his first plan was, "Lower the price! We're losing sales!" He went to $ 11.95. Sadly, they weren't selling more than 5-8 eBooks per month for the last 3 months, and it was hurting his business.
We began to do some research together.
Discovering that most of his competitors were charging $ 69.95 for the same niche and subject, it became clear to me that the reason people weren't buying is because it was way underpriced and not taken seriously. Did you hear me? They weren't losing sales because the product was overpriced…. rather, it was the exact opposite. My advice was to stay at market value AND he should raise the price to $ 54.95. You can only imagine how nervous he was about this move. Trusting me as one who has sold products online for 15 years, he decided to 'give it a 3 month test."
The first month out the gates he made more than $ 5400.00 in his information publishing company. That's 3 times the amount he was used to at a HIGHER price. He raised his pricing, remember? He didn't lower it. He became MORE competitive and mirrored his actual value.
Don't buy into the notion that it's the recession.
In this case it was a devaluing of the content and a severely underpriced product that caused a huge loss in sales. But what if the problem is you've been asking toomuch?
More than anything I hear from clients and coaching students a concern that they might be asking too much. First thing I always suggest is to run a sale. See if lowering the price brings in more profits. Be careful to not put the sale price so low that you shoot yourself in the foot, but a good rule of thumb would be a 25-30% price reduction. See how your client base responds.
Another important aspect of knowing when your price is at it's sweet spot is to take a good look at the size of your list.
If you only have 349 people on your list there is not enough concrete data yet to give any kind of objective feedback. In this case you'll want to build your list more before rolling out a test with a discount.
In many cases simply building a bigger list, sending some different offers to the email list and PPC ads gives enough feedback to know what to adjust.
Be very aware of what the market is paying for what you offer is key. Walk in integrity and don't overprice services, for example, just because you think you can "get it". When you are marketing your skill, in things such as coaching, writing, marketing, etc, it's wise to know what you're currently worth and price accordingly.
EXPERTISE and results = value.
If you've never written an email that has produced more than $ 100,000 in profits, than it's important to not charge the same rate as someone who can write at this level. It can be tempting for someone just starting out to think that they can charge top-rates, just because people will pay it. Honestly and integrity however will earn you far more money in the long run.
Setting your prices isn't a mystery- your own heart is a good check point. Listen to your gut. But that isn't enough. Ask your mentor or mastermind group for their input.
Remember, pitied is the business owner whose only judgement is their own reflection in the mirror. Always have reliable and trustworthy people who can and will speak truth into your life so that you can soar as you grow!
With love,
Sandi Krakowski
