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In today’s podcast, we are going to talk about how to price your digital product.
This topic is probably one of the most asked questions that we get and it is a really difficult subject because there are a lot of variables and factors that come into what we’re going to talk about today.
You will learn:
- 5 tips for pricing your digital product
- How to determine the worth of your digital products
- How to figure out what people are willing to pay
- Why you need a reason for the price you choose
- Why you should be positioning your price at the high end of the market
- To discount or not?
Enjoy the podcast; we hope it inspires you to explore what’s possible for your family!
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Links and resources mentioned in today’s show:
- Send your questions to Q&A with S&J
- Elementary Librarians
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If you have comments or questions, please be sure to leave them below in the comment section of this post. See y’all next week!
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Each week Jocelyn and I share moments that we might have missed if we had not started our online business. We hope these moments inspire you to see the possibilities and freedom online business could provide for your family.
Can’t listen right now? Read the transcript below!
JOCELYN: Hey y’all! On today’s podcast, we are going to talk about how to price your digital product.
SHANE: Welcome to the Flipped Lifestyle Podcast, where life always comes before work. We’re your hosts, Shane and Jocelyn Sams. Join us each week as we teach you how to flip your lifestyle upside down by selling stuff online. Are you ready for something different? All right, let’s get started!
JOCELYN: Hey guys, thanks for joining us for this week’s Flipped Lifestyle Podcast. We are going to be talking about how to price your digital product today but before we do that, we want to take just a minute and read one of the Facebook posts that you guys have left for us. We’ve been kind of rotating between iTunes reviews, Twitter posts, and Facebook posts, and today, we’re going to do a Facebook post.
SHANE: Today’s post comes from Matthew Pickens and he writes, “S&J, thanks for your down home, laid back southern real way of communicating. I am bad at math too.” Thanks, man. We appreciate that. It’s good to know we’re not alone. “You give real information wrapped in a biscuit of hope. This is Jocelyn’s favorite quote of the week, I think, last time she saw that.”
JOCELYN: I’ve never heard that one before, Matthew.
SHANE: It’s pretty awesome. We will be adopting that in our lingo. “My wife and I are listening to your podcast and we are ready to flip our lives too.” That was an awesome quote, Matthew. Thank you so much. If you guys want to reach out to us in any way, a great place to do that is on our Facebook page and you can find that over at Facebook.com/FlippedLifestyle. Not only can you leave us a message anytime. We read every one of them but you can also come on Sunday nights at 8 PM Eastern Time and we take questions for our Q&A podcast. Make sure if you have not done so yet, go over to Facebook and follow us, and reach out and send us a message.
All right, let’s jump into our topic today. Our topic is probably one of the most asked questions that we get and it is a really difficult subject because there are a lot of variables and factors that come into what we’re going to talk about today. We’re going to talk about pricing your digital product. How do you know how much your digital product is worth? How do you know how much people are willing to pay for your digital product? That is a very complicated thing and we’re going to try to break it down today into a few tips to help you understand a little bit better how to price your product.
JOCELYN: When we first started selling digital products, we just had to guess at the pricing. I think a lot of people have to do this especially if there aren’t a whole lot of people out there doing what you want to do. We have learned a lot from the mistakes that we’ve made and we want to help you to avoid some of those mistakes. We’re going to start out today by giving you five tips for pricing your digital product.
The first one is don’t low ball your product. I think a lot of people make this mistake when they are going in. They want to be the lowest price so that people will buy their product and they think that with so much free information out there on the internet that there’s no way people will be willing to pay a premium price for your information. That is not true at all. This isn’t Wal-Mart. You can’t compete on price because it’s a losing battle. There are so many people out there. You need to be providing real value with your product so that people are willing to pay a premium price.
If you’re not going to charge a premium price for your product then there’s probably not a lot of point in selling it because you’re not going to make any money. It’s really important to identify a small niche that you want to target. If you are trying to target everyone, if I’m going to target every teacher in America, then I’m not going to be able to make a product that they are willing to pay a premium price for. But if I want to target elementary school librarians, then I can make a value packed product that people are willing to pay a premium price for. You would much rather sell a higher-priced product to fewer people than to sell a low-priced product to a lot of people. The financial difference is astronomical and I realized this, this past year when I raised my prices to over double.
SHANE: It all goes back to the premise of how do I get x people to give me x dollars. If you create an ebook and you sell it for $2 and you get 100 people to buy it, then you’re only going to have $200, but if you create a value-packed ebook like Jocelyn was saying and it’s very premium and you charge $25 for it, you convince 100 people to buy that, now you’re going to have $2,500. The same effort is going to go into finding those 100 people to get the $2 product as it is the $25 product. It makes absolutely no sense to charge very, very low prices for your product. If you don’t feel like your product is worth a premium price, maybe that $200 ebook or video that you’re trying to sell to teach someone how to do something, then you probably need to go back and pack it with more value. That way, it is worth that.
You do have to create content that is worth what you’re selling it for. You can’t just write a 15-page ebook and charge $50 for it. If you have something that answers someone’s questions, solves their problem, and you did a really good job of flushing that out and explaining it well, then you have every right to charge a premium price for it. Jocelyn and I have a few products in the lower tier, like $25-$50 range, but the vast majority of our products cost $200-$500 and that’s what we focus most of our marketing and effort on because we know that we have to find less people than buy those premium products and we’re going to make a whole lot more money. Also to higher prices, scream value. When someone sees something that’s $2, it looks kind of cheap. When they see something that’s $50, $100 then they are thinking, “Man, there must be some good information in that.”
JOCELYN: For your first product, you may want to aim somewhere in the $50-$100 range. Just make sure that you are giving your potential customers enough value to be able to justify that price.
SHANE: Our second tip for pricing your product is to give people options. I think this was a mistake that we made early on. We were like, “How much is this worth? Well, this is worth $75 and I have to sell it for $75.” I’m going to have a sales page and at the bottom, it’s just going to say, “This product is $75.” But what we learned is that you can take your product and you can kind of shift it around a little bit and you need to be offering more than one price for the digital products that you’re selling. You might have one version of the product that’s $100 and then you may also have another version of the product that maybe gets a premium forum or they get email support and you charge $150 for that.
What that does is it gives people those options. If someone shows up and they see your price, then they are comparing you to other people who are out there selling that same kind of information but if you give them two prices right there on the page, now they are going to compare both of your options and they are going to select one of your options that best fits their needs. They may want the premium package with email support and they are going to give you $150 for that or they may go ahead and save a little money and just take the one that does not have email support for $100. That being said, it’s important that you don’t give people too many options. You probably don’t want to give any customer more than three options because then they are going to have information overload and they are going to look at that and get confused. They are going to get indecisive and they may bail out of the transaction because they don’t know which one is best and it gets too convoluted when you’ve got five options sitting there for a given product.
We always try to stick with two or three options. We might have two options, we have the low price but then the higher price is very close to it. If you are charging $100 for the bottom price, don’t charge $1,000 for the second price. You want them to be close so it’s kind of a no-brainer for the person to pick the more expensive option. If you have three options, you’re really trying to guide people toward the middle one. Let’s say you have $297 product. You really want to sell that for $297, you might have an upper end at $347and a low end at $150, that way if someone wants to save a little money, they can. If they want to go ahead and upgrade, that’s fine too, but it kind of pushes everybody toward that middle option. That’s a good balance between price and value.
JOCELYN: That’s what I’ve done most recently on my Elementary Librarian site. Right now, I have three main packages. I have like a semester only and it’s around $200. I have a premium package which is the full year of digital lesson plans plus a printed book and it is around, I think, $300, and then I have a deluxe package I call it, that has the digital lesson plans, the printed book, plus some bonuses for $450. You will be surprised at how many people actually choose the higher package. Be sure to use bonuses and things like that as incentives for people to go to that higher priced product. That doesn’t really cost me any extra because the work has already been done but it makes that product that much more value packed for the people who are interested in buying it.
SHANE: So the bottom line is you don’t have to just settle for one price. If you are kind of looking at something and you’re saying, “Oh man, I want to charge $50 for this or I want to charge $47 for this but maybe it’s only worth $27.” Well, there’s no reason you can’t choose both. You just have to differentiate those two products a little bit to make sure that you’re giving people those options.
JOCELYN: Okay, so we talked about not low balling your product as tip #1. We talked about giving people pricing options in tip #2. So tip #3 is to have a reason for your pricing. This is really what we’re talking about in this entire podcast here. But what I like to do is for marketing purposes, I like to say that things are worth approximately x dollars per day. For instance, my lesson plan product, there are 200 days roughly in a school year so my lesson plans are roughly $1 a day or somewhere around that price point. If you can break it down that way, if it’s something like a daily product or a weekly product, you can always break it down by the day and I’d like to do that because I think that it gives people a tangible thing to look at. If your product does not break down by the day, think of something that you could break it down by. A $1 value per chapter, $1 value per module just to kind of give people to wrap their head around.
SHANE: The thing is you have to explain that to your audience. When they come to your sales page, like for example, don’t just say, “I have a workout manual that has 260 workouts.” You can’t do that. That just gives them one thing. Unpack it and say, “I’ve got weightlifting workouts, I’ve got speed workouts, I’ve got diet plans, nutrition, and motivation.” You have to unpack it and clearly explain that in your sales copy to let people know why this is $100, why this is $500. If you don’t clearly explain that, if you just do it because you think the product is worth it, then no one is going to buy it. So when you come up with what your product is worth per unit, per module, per day whatever, make sure you’re including that in your sales copy so they understand what they are getting.
JOCELYN: On that note, you can also break things down speed workout, a $100 value or weight lifting workout, a $75 value just to kind of put it in perspective for people so that they know what those items would be worth if they were packaged separately.
SHANE: Make sure that when you unpack it, if they add it all of that up, it should be worth more than the price. So if your speed workout is worth $100 and the weightlifting workout that you’re selling is worth $300, that’s $400 total. The price might be $297 and that way, they can save $100 if they choose the group bundled pack instead of all the individual options.
JOCELYN: Don’t assume that people can figure this out for themselves – they can’t. Spell it out right there for them. Just say, “This is what this is worth and this is what I’m offering it for. This is a special price of whatever.” That really helps you out. I have had a lot of success with those options that I have offered with that kind of pricing. Another thing that you want to do is check your competition. You certainly don’t have to match if your material is different but you do want to know what’s out there and see what their offer is, see how yours is better, worse, different, and price your products according to that.
Another thing that I always try to do with anything that I put out is I always under promise and over deliver. Make sure that you are giving your people something that they will want to tell their friends about and more importantly, come back and buy other products when you have them available. Make sure that you are giving people good value for their money. A good way to do this is to maybe give away some free copies or maybe some heavily discounted copies when you’re first starting out and ask people questions about it. Ask them, “Is this beneficial for you? How would you change it? How could I make it better? Is there anything that you wish that I would have done with this product?”
Really try to get some good feedback from your early adapters and reward them for that. That will give you some good testimonials for your product, which are so very important and it also helps you to make sure that you’re pricing is where it needs to be. Finally, think about what you would pay for a similar product because most likely if you are creating a digital product, you would be in your target market if you were out looking for something like this. So just think to yourself, “What would I pay for this realistically? That would help you so much when you’re thinking about how to price that product.
SHANE: Our fourth tip is that you should always position your price at the high end of the market. If you go out there like Jocelyn said and you see some people selling similar things, it might be a little different but it’s in the same space, and let’s say that you see someone selling it for $500, let’s say you find this awesome digital product that is kind of similar to what you’re doing, a little bit different, you’ve got a good spin on it, let’s say, $497. So you find that and you think to yourself, “Man, I’m going to come in and I’m going to offer the same value and I’m going to give it away for $100. That will just undercut the competition and I’ll make more sales because of it.” That’s really not the case. That’s not true because what’s going to happen is people are going to view your option as cheap or kind of the generic alternative.
Think about when you buy stuff at a $1 store. It’s always going to break on you. Eventually, you buy a couple and then you’re like, “Uh, I’m just going to get a real one even though it’s $25 and I’ve been buying this for $5. I’m sick of this thing being junk.” Don’t make your product look like junk by trying to under price the competition so much. You can price within, say, 10% or something like that. Oh, I’ve got myself in a math problem here. Let’s say you’ve got a product that’s $500. What’s 10% of $500? $50, there you go. Go ahead and price it at $450. You’re still lower than the alternative so you can still save people $50 over the competition but now you’re up in that higher range. You’re kind of on the level of your competition and people see that and they are like, “Man, these are both great products. They are both expensive so they must really know what they are talking about. But this one is a few dollars cheaper so I’ll go ahead and buy this one because I’ll save $50.”
What it does is it just makes your product a bit more valuable and it makes you look like you’re an expert in your field. It puts you on par with the people who are selling higher prices and it just makes you look more prestigious, I guess, is the best thing to say. This goes back to kind of low balling your product. Don’t put a really cheap price just because your competition is expensive. You can undercut them a little bit if you want to, if you want to drop your price a little bit below them and put it side by side to save people some money that’s fine.
Do that but don’t have an extreme difference between you and the top part of your market. Also, if you believe in your product, you believe in what you’ve done, and you believe it’s valuable, there’s nothing wrong with going in and pricing higher than your competitor and then you can say, “Look, I’m charging more because this is more valuable. This is a better product and I believe that it is going to answer your questions and solve your problems.” Always look at the market and say, “I’m going to price at the high end of the market. Don’t try to undercut everyone. You’re really just going to make yourself look cheap and you’re going to probably push yourself kind of out of you.
JOCELYN: The fifth tip for pricing your digital product is to stick to your guns. What I mean by that is don’t deep discount in desperation to make a sale. People are going to email you and they are going to say, “I only have $97. Can I buy your $400 product?” No.
SHANE: It happens all the time, all the time.
JOCELYN: I mean, it does happen all the time. A lot of times, your instinct is to say “yes” because you want to make a sale. Maybe your digital product isn’t selling very well and you think, “Well, some is better than none.” No, don’t do it. If there is something wrong with your pricing, if you’re not selling any then something may be wrong with your pricing and you need to change it, but if you’re selling some and things are going relatively well and people ask you to deep discount, don’t do it because people are going to tell other people. You’re going to be perceived as a pushover who will do anything to sell a product and you don’t want to do that. I just respectfully tell people no. You can offer them some kind of discount code if you want to make the sale. Maybe you can say, “Well, I can’t do $97 but…”
SHANE: I’ll give you 5% off or something.
JOCELYN: “…I’ll give you a coupon for whatever,” and that’s offering some goodwill to your customer and also it’s allowing you to make a sale but you’re not deep discounting it so much. You’ll be surprised, the people will tell you, “Oh, there’s no way that I can buy this product and then magically, they’ll come up with the money.” This has happened to me so many times. Don’t do that. If someone is begging you to do it, it’s just not a good idea.
SHANE: A lot of times what we found too like when people write in to get discounts or you cheapen your product, when you really low ball yourself or you give someone a deep discount, almost every time that has ever happened –because we have done that before. We were like, “Oh we feel bad for somebody. Let’s give them the discount.” Those people end up being the biggest headaches. They end up writing you emails all the time. They are constantly complaining about something. “Why don’t you have this? Could you make me this? Could you do that?” and then they keep coming back and asking for more and more discounts. We don’t want those kinds of customers. We don’t want problem customers.
We don’t want people who are spending the least amount of money taking up the most amount of our time with customer service or questions about our products. That almost always happens but that’s the person that’s going to do that. By pricing your price higher, sticking to your guns, and valuing yourself and your work, you’re going to eliminate all of those problems on the front end because the customers you do get are going to be the ones that complain the least. They are going to move on and they are going to take advantage of what you’ve given them and they are going to take action on it.
I have a product that I sell for $200 and it used to be on sale for like $75. It sold more at the $200 price but the craziest thing was I used to always get emails and questions and little nitpicky things about that product when it was $75. But when I changed it to $197, I have not received a single email almost at all about customer service for that product. It was just amazing to watch that happen and not only did it sell more copies and make a ton more money, but my customer service issues went completely to zero. When you get those emails, you can be nice and you can feel sorry for them and you can give them a little bit of a discount if you want to, but don’t do anything crazy and cheapen the value of your product.
JOCELYN: One way to avoid getting some of these emails is to have periodic sales and we are going to do a complete marketing episode later but I just want to throw this in here. You can have like, I have a Black Friday sale. I have an end of school year sale. I only have two major sales each year but that’s one thing that you can write back and tell people. You can always say, “I can’t lower my price right now but my Black Friday sale is coming up in one month so be on the lookout for that.” That’s one way just to kind of get people off your back a little bit and still try to provide that good customer experience.
SHANE: All right, we’ve got a quick bonus tip here for you too about the actual number that you’re going to use in your pricing. You don’t want to price on the zeros. You don’t want to charge, I’ve used it in a lot of our examples but you don’t want to just say, “My price is $50 or my price is $100.” The reason is because people kind of see that as rounding up. That’s just kind of a psychological thing, you look at a price and you’re like, that’s why when you go to the store, everything is like $9.95, $19.95, or you go to the car dealership and it’s like, $19,995, whatever that’s $20,000 but there really is a psychological difference when you see that zero on the end of the number. That’s going to maybe make people balk.
We always price a little bit below the zero. So if we’re going to charge $50 for a product, we usually charge $47 and the reason why we choose $47, we don’t choose $49 because 49, the 9 feels bigger, it’s kind of closer to the 50 and we’ve just found that by ending most of our products in 7’s that we usually can kind of increase sales a little bit because of that. If you are going to charge $100, charge $97. If you are going to charge $500, charge maybe $497 or $477. Pick something that is a little bit lower than that zero ending number and people are going to like that a little bit better.
JOCELYN: Yeah, there are people out there a lot smarter than us who do these studies about how people will buy things and the 7 number supposedly is higher converting than like 99, so just something to think about.
SHANE: You kind of think like 7, it feels lower, it’s not the 9 and also it’s a lucky number for a lot of people, things like that. Just make sure when you’re pricing your stuff, losing that $2 or $3 of sale in the grand scheme of things, in the long run, is not going to matter and also you’re probably going to sell more copies so you’re eventually going to make more money doing it this way than you would if you would just pricing on the zeros.
JOCELYN: Okay guys, we’ve thrown a lot of information out there about pricing a digital product. We had five tips for you just to review: 1) don’t low ball your product, 2) give people options, 3) have a reason for your pricing, 4) position your pricing at the high end of the market and 5) stick to your guns and don’t deep discount. We had the bonus tip to not price on the zeros. Remember, just don’t undervalue your product and yourself. Your product is worth it. You’ve worked hard on it. You have put in the blood, sweat, and tears to make it and people need to pay you accordingly. Just keep that in mind and just remember to always charge what you and your product are worth.
SHANE: Don’t forget that prices are not permanent. You don’t have to go out there and get this right on the first try. When you have a price of a product online, it’s easy to change. You just go to your dashboard and hit delete a couple of times and change it from $50 to $100 or from a $47 to $97. Don’t worry about getting this perfect the first time. If you put a price out there and it’s not selling, let it sit for a while, try a few other things first, make sure it’s not your sales copy, make sure it’s not your marketing, and if your price isn’t right, go ahead and just change it. There’s no problem with that. The internet is very forgiving, 90% of the people who see that price will probably not see it again and all of the people who come after them will only know about the new price.
Don’t freak out when you’re trying to price your product. If you’re frozen about this, I see this so much. People create a digital product, they get the sales page down and they are like, “I just don’t know the price,” and they sit there and stare at it for like a month and they never sell anything. Just pick a number, put it out there, and see if it sells. If it sells really well, raise the price. If it doesn’t sell at all, well, after a while, maybe lower the price, but you don’t have to get it right the first time. It doesn’t have to be perfect. It’s just like anything else online. Get it done, get it out there, let the world see it, and then adjust according to how it all plays out.
All right guys, before we get out of here, hope you enjoyed that episode about pricing your product. It’s a very confusing topic, we still struggle with that. One of the things we do when we get down with our digital products is we discuss the pricing a lot before we put it out there. We get each other’s feedback and then we just go with it and we change it. Don’t feel like you’re alone in struggling with your pricing. Jocelyn and I still do it. Everyone online who sells anything struggles with pricing. You just have to get something on the product and get it out there.
Now before we get out of here, we always like to share our Can’t Miss Moments. These are moments that we experience in our life during the week if we had not quit and we kind of look back and say, “Man, we would have missed this if we had not quit our job and started our online business. Jocelyn, what is your Can’t Miss Moment this week?
JOCELYN: My Can’t Miss Moment is my little boy Isaac’s drawing this week. It was Thanksgiving week last week and at school, they did some drawings and writing about something that they were thankful for and Isaac’s picture, he said, “I am thankful for family” and he drew a picture of each of us. I just loved it because we’re able to do so many more things together as a family because of online business and I think that our kids in their own little way realize that too. It’s just so cool to see. I was just so excited when I opened that up and that’s what he had written on his paper.
SHANE: Isaac has actually asked me lately too, he’ll ask about other people’s jobs. I think he is noticing more that like we’re home with him whenever he’s home and that we have the freedom to go do those things with him so I think he’s definitely picking up on that too. Mine was actually decorating our Christmas tree. I think this is the earliest we’ve ever put our Christmas tree up in our entire marriage just because before when we were going to decorate our Christmas tree, we were always like, “Uh, we got to get that out. We’re stressed. We’re tired from work and I just don’t feel like doing that tonight.” We would always put it off and decorate our tree on December 18th or something like that. This year, we actually got our tree decorated before Thanksgiving and we’re relaxing at night.
It was just a good experience and I really don’t remember ever having that great of an experience decorating our Christmas tree. It has always been a chore before but now it was something that we could really enjoy with our kids and they were running around with Santa Claus hats and something like that. It was just awesome to be able to actually not just experience something new or that you might not be able to when you’re working for somebody else or doing something else, but just being able to actually enjoy that experience and not dread it. That was mine. It was just decorating our Christmas tree and getting it up really early this year.
JOCELYN: Okay, I hope that you guys enjoyed today’s show and I hope that that helps you to price your digital products and get those selling so you can have some Can’t Miss Moments of your own in the near future. That’s all we have for this week. We will see you all later.
SHANE: Catch you on the flipside, bye.
JOCELYN: Bye!
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