One of your jobs as an online seller is to find the pricing “sweet spot” with your products. This requires a little upfront research, a little bit of experience, and a bit of testing.
Here are the questions to ask yourself in order to help determine the price that will bring you the highest conversions, lowest refunds, and most profits…
What are your competitors charging for similar products?
What you’re going to find is a range of prices, but you’ll also find a median price or price range. This is where MOST similar products are priced.
For example, let’s suppose you’re selling a simple eBook, and you notice that prices for competing products range from $5 to $50.
However, perhaps you find that most products sit right around $20. You can use this $20 price point as your starting price, and then slide up or down on the price depending on your answers to the following questions.
How does your offer differ from the competing products?
Next, you want to look at exactly what you’re offering versus what the competitors are offering. This includes:
What format is your product?
Some product formats naturally increase the perceived value of a product. For example, a video carries a higher perceived value than an eBook.
What sort of accessories/supplements/bonuses are you offering?
Certain bonuses can really boost the perceived value of an offer, such as coaching.
How are your positioning your product in the market?
This is about your overall branding as well as your positioning for that specific product. And both the overall branding and positioning may heavily influence your price.
For example, if you’ve positioned your business as a “low price leader,” then obviously you need to price your products on the low end of the typical price range for similar products.
On the flip side, if you’re using positioning that speaks to high quality, luxury, or uniqueness, then you can price the product at or above the high end of the price range.
How will you track and test your pricing strategy?
So, at this point you’ve picked a price based on what your competitors are charging for similar products, as well as the perceived value of your product and your positioning.
Now you need to track and test your pricing. The fastest way to do this is by using paid advertising – such as through Facebook or Google AdWords – where you can send a lot of traffic, test several prices, and know which one produces the most conversions within hours or days. It’s the only way to determine your true pricing sweet spot!
If you ask yourself the questions above and follow through with research and testing, you have a good chance of finding your optimal price.
Best thing to do is to walk into this process without expectations, because sometimes pricing takes an unexpected turn (such as a higher price producing better conversions and lower refunds).
Just be sure to look at overall profits (front and backend) to determine the best pricing strategy for you.