It is simple to price physical products. It is easy to price physical products. You already know the cost of producing the product. Then you can base your price on how much profit it will make. It’s quite different with digital products.
Your digital products can’t be priced the same as physical products. This is a common mistake made by new merchants and it can cost them vital customers.
Digital products have an undeniable appeal. Digital products don’t require any materials, other than the digital applications. There is no shipping cost, no complicated storage, and no material costs. It is easy to make one and sell it endlessly.
Digital products offer so many benefits that it is easy to see why they are becoming a big trend in eCommerce. What are they selling? These are the digital products you’ve seen all over the internet recently:
- Online Courses
- Graphics and Digital Arts
There are so many options available, how can you decide where to start when it comes to pricing? Pricing physical products is not always the best option. What does this mean for your online shop?
You must have a solid pricing strategy if you want to enter the digital marketplace of eCommerce. Pricing is one the most important Four Ps in Marketing. Don’t forget to include it in your business.
These are six ways to ensure that your digital product is sold.
1. High Price
Pricing your physical product is based on the cost of production. It’s all about value when pricing your digital product.
Smart pricing can also be as high priced as pricing. This gives your product value and is not always easily translated into digital space. Your customers should choose your eBook over the hardcover book at Barnes & Noble.
This math is not difficult to grasp even if you aren’t an accountant. You’ll sell more eBooks if they cost $1.99. You’d rather sell 1 eBook for $25 than 10 for $1.99.
The cost of acquiring a customer, no matter how expensive your product is, will be the same regardless of what price you set. It is important to get as much profit as possible for the acquisition cost.
You want your customers to love your product as a merchant. Which product will they be most satisfied with? Is it a $200 online course or one that costs $50? Don’t undersell yourself.
2. Pricing based on value
You can’t base the price of your product on its cost of production. Instead, you must base it on your perceived value. It’s smart to price high when you’re selling high-value products, but there’s another way: value-based pricing.
What is value-based pricing? It’s simply a way to determine how valuable your customers are. Your digital product can be high-value if it teaches a difficult skill or provides a money-saving solution.
Your product represents an investment in your customers’ future. What is the value of that investment? This is a good starting point to determine the price of your product.
You can offer a solid return on your investment if you are offering an eBook about how to start a freelancing business. Set your price accordingly. To protect your hard work, you might consider watermarking an eBook.
3. Tiered Pricing
If you have purchased anything online in recent times, then tiered pricing is probably something that you have seen. Different people value different things so you may need to make different product tiers for different customers. This allows you to market to different customers.
Customers will buy at the highest price level, but there are also customers who will choose to purchase at a lower price because they believe they are getting a better deal. Tiered pricing is most common for software. However, it can be used for any digital product.
Let’s look at the eBook again. The eBook could be your lowest tier. This is a great value that can be used by anyone who doesn’t require additional resources. The eBook, corresponding workbook and a printable guide could be your highest tier.
You can see that offering different options to different customers only increases your profits. Although it can be expensive to add on physical products, they are relatively inexpensive in digital.
4. Do a trial before you buy
Before customers will make a purchase, they need to feel confident about your product. Although trust can be built by using your store, sometimes it is necessary to give customers an extra push. It’s a great way to build trust.
Heidi Zak is co-founder and CEO at ThirdLove. She believes in trying before you buy marketing to overcome concerns. Zak says that letting customers try the product before buying it is the best way for them to overcome their fears.
Customers are more sophisticated than ever. Customers don’t want their money wasted on digital products that aren’t useful. Customers on the fence will be able to get a free sample, trial or another money-back guarantee.
5. Additional Bonus
Free things are a great thing! This holds true for digital and physical products alike. Everybody loves knowing they are getting a deal.
A great way to increase the value of your digital product is to include a gift with every purchase. Let’s look at the freelancer eBook once again. You might consider adding an invoice template free of charge that can be downloaded to help new freelancers communicate with clients.
Even though they are small, customers will see that these freebies are worthwhile. It is important to focus on the value of your bonus. You can’t make it a quick Microsoft Excel spreadsheet. Make it count.
6. Psychological pricing
Finally, basic psychology is a great option when all else fails. These methods are available at most major retailers in the country. However, you can also use them in your store.
You’ll be surprised at the low prices in high-end shops. However, if you go to your local bargain shop, the prices for all products end in a 9 and a 7. What’s the deal?
Although there may be a slight difference in pricing, we make up the difference with value. This sounds like a better deal than buying a product at $30. Although it is a small psychological trick, it has profound effects on our understanding of prices.
Sell More Digital Products
Pricing your digital products doesn’t have to be rocket science. Don’t make the mistake of believing that there is a universal pricing solution. Trial and error is the key to success.
Examine the benefits of your digital product. What value are you providing your customers? What price can you set it at?
Underpricing is the biggest mistake made by new merchants. When you underprice your digital product, you cheapen it. This message should not be sent to customers accidentally. Be aware of your eCommerce profitability.
These pricing methods can be used as a guideline for your products.
Which of the above pricing methods did you use? Let us know what worked and what didn’t. Please share your thoughts with us in the comments.