Have you ever noticed that products in your niche are priced at varying levels – from $7 to $2,000?
If you are selling the $7 product, you may be asking yourself how anyone could sell a $2,000 product. On the other hand, if you are selling the $2,000 product, you are probably asking how anyone can afford to sell a $7 product.
There is no magic formula that says “if you have 6 videos and 3 PDFs, charge this amount.” Instead you need to set your price based on the value you deliver. And to judge that value, you need to look at it from your point of view, as well as your customer’s perspective.
Pricing is a matter of comfort and expectations. If you are selling at the lower end of the price range, you probably also buy in that same price range. It is what you are used to. You have a hard time convincing yourself that any product could be worth $2,000. As long as you continue to buy less expensive products, you will have a difficult time raising your prices beyond your personal comfort level.
Price is about perception. In our society, higher prices indicate better quality, more value, more expertise.
Does price guarantee any of these things? Not necessarily. You can buy a car for $8,000 or $80,000. Will both of them get you to your destination? Yes. Do both of them sell? Yes. Is there 10 times the quality, the value, and the expertise in the higher priced car? Maybe.
The point is price doesn’t guarantee anything, other than that you will pay more. But most people assume a higher price means a better product.
One other factor that you want to consider in raising your prices is customer service. When asked, virtually all information publishers agree that the higher the price point on your product, the fewer complaints and customer support issues you have. That single consideration is a strong recommendation for raising prices.
So, how do you raise your prices? Just do it. Announce the price increase if you want a flurry of last minute sales and give a specific deadline. Or just raise the price.
As you raise your prices you need to start raising your expectations as well. It is hard to sell someone a $197 product if you are not willing to pay that much for product yourself.
Raising prices is both a smart move and one that involves a change in your personal habits. If you cannot believe your product or any product is worth that amount, you will not be able to sell it at the higher price regardless of the sales copy that you write.
Change your personal buying habits and raise your price.
So what do YOU think? Can you sell a higher priced-product when you aren’t willing to pay the higher price yourself? Let me hear your opinion in the comments below.
I think that there are two opposing forces when it comes to setting a price. One, it comes from a person’s view of the contribution. We sometimes think that because some expertise comes easy to us, that it shouldn’t be priced high when making that expertise available on the marketplace so we don’t.
The other is our perception of the value of products that are being made available on the marketplace. The best way I can describe this is the feeling I get when I look at something that is “made in China”. I know that such a product will not last longer than trying to put it together. If it don’t break then, it will soon after. Low quality and lack of care(?) for the consumer I think maybe the reason behind such a shoddy quality. This is what I feel when I look at the offerings in the Internet Marketing world. Most of the high priced items are very low quality (I’ve paid those prices) and are outdated. They are difficult to implement and often impossible to duplicate. At least from the point of view of a starting internet marketing point of view.
These then contribute to a difficulty in seeing value in the product being offered as a result it takes more than just coming right out and saying, I’m raising the price, I believe.
I think it takes building the foundation, within the marketplace, that justifies that perception of a higher value.
I think this also applies to services rendered in the marketplace.
For what it’s worth,
Joe Cepeda
PS: As usual, a great article. Thanks for sharing it with us.
Joe – just today I was interviewed by Lisa Suttora on her ecommerce radio show – and we were talking about exactly this – that the things that are “easy” for us but gets oohs and ahhs from others is where our gift lies – and that’s what we want to capitalize on. So your comment really hit home.
I also agree about some of the lower quality products being the ones that newer marketers tend to find first. Probably because they are heavily marketed and have been around a long time. But if someone sticks with the market long enough, they find the quality products that are offered at a fair price.
And when you offer one good product after another at a fair price, you have the right to raise the price. In fact, most people who are providing quality products are probably undercharging. And yes, services fall into this category as well.
Thanks for your comments – it’s so nice to hear different perspectives.
Jeanette
I agree about changing your habits and expectations re price. I have recently begun to sell a health product via MLM and the product is “expensive”. I find myself saying “I need new friends, none of my friends will pay this much”. I HAVE paid “that much” for it, but it was hard to do so since I normally find bargains and live very well on very little. This attitude will not do however for the product I want to sell. And I believe in this product very strongly. I know deep down that I have to change my expectations – which is at once scary and exciting.
Not only is it true that you have to spend money to make money, you have to think money to attract money.
cheers
Nod
Wow, Nod. I have to totally agree with you! One of the things a lot of people don’t realize is that you have to change your mental habits and attitudes as you start to make more money. In fact, you have to make these changes *before* you start to make more money.
So the perception that something is “too expensive” makes it very difficult to sell to others. That’s why I think a lot of people don’t charge a fair price for their products – they are still thinking “poor” and bargain-hunting thoughts. So you’re right – even when you’re selling another product that you didn’t create, you still need to bring your thinking in line with your product’s value.
Thanks for contributing to the conversation.
Jeanette
Jeanette
Great content as always. I do a lot of work on pricing at Charge What You Deserve and I love your input. One problem with low prices is that people don’t feel the need to market or point out the real value that their program offers. They tend to feel that with a low price offer the sales will be automatic. Unfortunately, you have to go through the exact same steps when marketing any product regardless of price. So people often lack the confidence to raise their prices because they aren’t making the sales they would like. WHEW…it’s a bit of a catch-22. The good news is that raising your prices will actually gain the attention of new folks who may not have considered the low prices offers anyway. Bottom line…focus on value, both long term and short term. Write a list of all of the value that your programs deliver and be sure to communicate this in your marketing.
Thanks again for the great post!
Cheers
Tom
Tom – I’m flattered that you agree with me, given your expertise in this field. And what a great point about not marketing a low-priced item! I’ve fallen prey to this myself when I have lower-priced products. One email and I’m done. But you’re right – it’s the same amount of work to market a higher-priced product as it is to market a low-priced product. So let’s see – which should you sell? Actually, I think you need a variety of prices – because your market has a variety of needs. If you only sell $7 reports, then your market will only expect those from you. And if you only sell $2K products, then you’ll leave out a lot of your market.
You mentioned value – and I think that’s something a lot of people struggle with. How do you set the value of something? Is it based on how much the product will help you make? how much you’ll save? what you’ll learn? the contents of the package? It’s always a question in the minds of a lot of people.
Thanks for bringing your expertise over to comment. Looks like you would be a logical follow-up for people who want to get more information on this topic.
Jeanette
Hi Jeanette,
Pricing is always a hot topic, and I found your take on it interesting, and a little surprising.
I love the thought of taking a look at what we ourselves will pay and feel like it’s “worth it.” But as mentioned above, some people charge high prices for garbage. That’s just wrong. The true value of the products we are selling does come into play here, not just perceived value based on price alone. I think we need to create products that are true to the perception that a higher price means higher value. (I know you agree with me here.)
But what I think holds people back from raising prices usually has more to do with confidence and valuing what we have to offer. We may purchase high priced products and feel they are worth it, but never feel like we could charge that much (because of our self-image). That’s why I think it’s a great idea to start small and then build price progressively. It gives a path for customers to follow (and the quality of customers will get better as the prices increase) and we grow in confidence to charge more based on value in the process as well.
Bottom line: Deliver high value and charge what it’s worth – at least what you would have paid (or did pay) for it from someone else before you attained the level of knowledge you have now.
Thanks Jeanette. Great post.
Gabrielle
I do agree with you, Gabrielle, that we need the confidence to raise our prices. But some of that confidence comes from investing in higher priced products and seeing that they may be good – but are not really any better than what we are creating. Unless you have that measure to show how valuable your products are I don’t think you’ll get around to raising your prices.
Always appreciate your comments – you and I think a lot alike, so sometimes it’s hard to disagree with you. 🙂
Jeanette
I thought you’d find a related blog post interesting. It fits perfectly with what we’ve been discussing here.
http://www.thelaunchcoach.com/why-affordable-products-hurt-you-and-your-customers
Enjoy!
I agree about changing your habits and expectations re price. I have recently begun to sell a health product via MLM and the product is “expensive”. I find myself saying “I need new friends, none of my friends will pay this much”. I HAVE paid “that much” for it, but it was hard to do so since I normally find bargains and live very well on very little. This attitude will not do however for the product I want to sell. And I believe in this product very strongly. I know deep down that I have to change my expectations – which is at once scary and exciting.
Not only is it true that you have to spend money to make money, you have to think money to attract money.
cheers
Nod