Figuring out how to price your digital products can be a nerve-racking experience. Do you price it high? Do you aim low and hope to make up for it in volume? Or do you just avoid the whole problem by giving it away for free?
This is part 1 of a 6-part series on how to price your digital products.
Figuring out how to price your digital products can be a nerve-racking experience.
Do you price it high? Do you aim low and hope to make up for it in volume?
Or do you just avoid the whole problem by giving it away for free?
There’s a lot of psychology that goes into figuring out your prices. And we’re not only talking about the psychology of your prospects. We’re talking about YOUR psychology as well. Very often, people base their prices on their own fears.
So, this post is going to be a guide to product pricing – specifically for digital products or services. In other words, intangibles.
This guide will consist of 6 different parts, published over the course of several days. During this series, we will be talking about:
- The solution to one’s fear of charging higher prices
- Why stuffing your product with a TON of stuff doesn’t necessarily justify a higher price
- How your price impacts happiness on the part of the customer – AND you as the seller.
- The exchange balance – and how it has everything to do with what life will look like after the sale.
- Why aiming low on your prices isn’t always a good idea
- The right time and place for having low prices
- How to test out a product idea that you want to charge for
- Pricing psychology, and where this movement of ending prices in “7” really comes from
- How price affects the perception of value
- How to ask people what they’d pay… without actually asking them
- How your pricing is affected by the competition
If you’ve struggled to figure out what to charge for your stuff, this series will be for you. And if you struggle with the idea of asking for any money in the first place, this will be for you. Oh, and if you’re scared of increasing your prices… then yep, you’ll like it, too.
Let’s Dive Right Into The Deep Stuff…
Low prices. It is one of the lowest hanging fruits of all of marketing.
Problem is, when everybody is competing on price, we end up in a big race to the bottom. It is such low-hanging fruit that one can easily jump to a conclusion that being lower priced than a competitor is going to make you stand out.
In the world of digital marketing, though, low prices are all too often based not on competition, but on fear. Fear of failure on the part of the product creator. So, in an effort to get some sales and not shatter their own hopes, they join the race to the bottom and price their stuff really low.
In some ways, it is a form of marketer groveling. It is like saying “Hey, look, I’m so cheap that you have to give me a chance!” It is born out of a lack of confidence. A lack of feeling worthy of somebody else’s money.
We could easily peg a few emotional issues to this whole thing. Such as:
- The fear of being perceived as “salesy”, so you deal with it by having really low prices (or worse, giving everything away for free)
- The fear that nobody will buy it.
- The fear of failure.
- The fear of not being able to actually fulfill your promises.
But, all of this has it’s root in one thing: confidence. Your own personal certainty.
In most cases, too, I think all those fears would go out the window if you were truly confident in what you were offering. If you KNEW it was an awesome product. If you KNEW it would help them and you had TOTAL confidence in your ability to deliver the outcome to them. If you were confident in all of that, would you still be pussy-footing around with your price?
Your entire personal character as a product creator changes when you know that what you’re selling is freakin’ awesome and valuable. If you don’t feel that way, then you would be “selling from your heels”. A constant push and pull with yourself – total inner conflict.
So, the solution – right out the gate – is to make a product that makes you excited. That makes you excited for your customer. You need to be confident in your product’s ability to deliver the outcome.
But, notice I said “deliver the outcome”. About that…
Maybe Your Product Needs To Go On A Diet
Here’s the thing…
What your customers want is an OUTCOME. They couldn’t give two shits how many videos are in your course – or how many modules. They just want the dang outcome.
This is an important reminder because way too many product creators try to justify their own pricing by aiming for sheer size. Like, throw not only the kitchen sink at them, but the whole freakin’ kitchen. An entire scroll of bonuses with fake dollar amounts. Just overwhelm the heck out of your customer to where they’ll be so windburned by the whole thing that they’ll just assume they got a lot for their money.
Not necessary. In fact, it could be downright dumb. You do not need to go for a major “thud factor” in your product to justify itself. Last time I looked, the Internet wasn’t exactly lacking for information. There are 300 hours of video uploaded to Youtube every minute, so your extra module with 5 hours of training just isn’t as impressive to people as it used to be.
What your customers value is the outcome and how effectively you can deliver it. And this has everything to do with how you price your product.
How Prices Affect Seller & Customer Happiness
Price isn’t only about what it takes to close the sale. It is also very relevant to how things are going to go after the sale has been made.
To understand why, you need to understand just now ingrained a sense of fair exchange is to every person. We all have an almost natural sense of fair exchange. And when one party begins to feel that this natural balance of exchange has been violated, bad things happen.
To understand why this happens, you need to understand how human beings deal with guilt. When one person feels they have done something wrong by another, there is a reactive desire to minimize the transgression by minimizing the receiving party. In basic terms, if Fred feels he wronged Ted, then you’re more likely going to see Fred saying mean things about Ted. By doing this, it make the transgression less for Fred.
This is why you’ll often see spoiled children end up resenting their parents. Even at a very young age, us humans have a natural sense of fair exchange.
So, when it comes to our pricing, we can actually end up creating an exchange imbalance, depending on which direction the imbalance goes. This table gives some of the reactions that may occur based on the balance of exchange…
Effective pricing is a balancing act, then.
- Your price needs to be fair for the outcome you’re giving them.
- Your price needs to be in your “happy zone”. Meaning, you need to be satisfied with the amount enough so that you’ll be motivated to ensure that the customer is really taken care of.
- Your price needs to be in your prospect’s “happy zone”. They want to feel as if you over-delivered and fulfilled all your promises, BUT the price paid needs to be enough so that the customer will value it and be invested in the outcome.
Yes, I said it was a balancing act. 🙂
See you in a couple days with part 2 of this series, where we’ll talk about when and where it is appropriate to low-ball your prices without causing long-term hard to your business. Not on my email list? Hit that big green button below.
See ya then.
Your Monetization Coach,