Quick Thoughts on Digital Infoproduct Pricing
Pricing is an art. Period. Science? Yeah, right.
Having said that, there are a number of scientific-ish bits of wisdom bandied about by the been-there-done-that’s that help keep us from going bonkers trying to figure all this out.
One you’ve probably heard is to get your cost of production per item and multiply that by 10 to get your minimum price (sometimes you see 8, but I prefer 10 — easier to multiply). Not bad. Easy enough to do with dead tree books and other physical products… but what about digital infoproducts?
On top of which, this 10X thing doesn’t take into account the perceived value of the information you’re selling, which in theory obviously is independent of media.
Throw in discounts, commissions to affiliates, marketing and administrative costs, not to mention infrastructure, etc. etc. etc.
Having fun yet?
OK, experience time: Here are a few things (very few) I’ve learned through the years on pricing infoproducts specifically. Use these tips if you want, flush them down the toilet if you think they’re stinkers… heck if I’ll take that personally. But either way, good luck!
There’s no such thing as a right price. Just too many factors, and the market’s in a constant state of flux anyway. Which points out that continuous testing is critical; best keep on your toes and adjust as needed.
What you can charge for your infoproduct are determined only by a combination of these two (2) factors (they are not mutually exclusive):
- How much your competition charges for similarly perceived products. And…
- The perceived value of your product.
What’s with the italics? This diagonally-leaning perception is another way of saying: A huge amount depends on your (and your competition’s) ability to sell and convince your prospects of the value of your respective offers.
Look at it this way: I don’t care how great your product is and how much prospects believe it’s worth X. If I can come in and convince (sell) these prospects on the simple notion that my product priced X/2 will give them the same value as yours, you’re dead.
By the same token, if I come up with a much better product, priced at exactly the same X as yours, but can’t convince prospects that my product’s as good, let alone better, I’m dead.
Science? Phffft.
Not that the science is of no use to us. Knowing the science and the numbers is a tremendous help… for what I call the go/no go decision — that point after you’ve reasonably determined the two factors above where you crunch the numbers and see if it’s worth the fight.
Discouraged yet? Don’t be. Because there’s also one other thing I’ve learned about the information market, easily summed up by this statement I like to use when some bozo is being argumentative about this particular topic:
I like to read mysteries. I just finished reading an excellent, riveting mystery last night. That doesn’t stop me from wanting to read more mysteries, does it?
It’s not always an either-or proposition, fiction and non. Our goal is to find the right playground.
Cool, huh?
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5 Responses to “Quick Thoughts on Digital Infoproduct Pricing”
By James Chartrand - JCM Enterprises on Nov 2, 2007 | Reply
An unrelated comment to your post, but one pertinent to your blog… why did you switch from full feed reading to snippets?
I liked the other way better - even blogged about avoiding snippets for feeds this morning!
By Wordpreneur on Nov 2, 2007 | Reply
Wasn’t aware I had switched anything. Thanks for letting me know. Will check it out.
ees
By Will on Nov 3, 2007 | Reply
Well, the snippet often leads me here. Where I see the Google ad (which I sometimes find of interest) and, if I have time, I peruse the site. And I might even leave a comment.
Pretty good reason for snippets, provided visitors to the web site is a primary goal.
If the primary goal is to be read and remembered, then web site visits may not be necessary to accomplish that.
Why do you publish this blog, Eldon?
Will
By Michael Werner on Nov 3, 2007 | Reply
Rule of Thumb:
If less than 2% of your products are being returned, your prices are too low.
By Jassen Bowman on Nov 4, 2007 | Reply
You know, that’s pretty interesting. My return rate is right around 2%, so I guess that means I’m doing OK. I’ve LONG presumed that any returns were bad, and it’s only lately that I’ve just begun to accept them as part of doing business.
In real estate brokerage, we have a similar concept: If a house has 12 showings and zero offers, then it’s overpriced. On the investing side of real estate, it’s that when you put out marketing to get calls from motivated sellers, you should buy 1 house for every 10-15 people that contact you.
I recall reading a while back that Dan Kennedy has about a 7% return rate on his information products, which I’ve always thought was staggering. But at his price points, it does kind of make sense.
Great blog, by the way.
-Jassen