It is the Digital Product Pricing Strategy How to Price Your Digital Product
Are you worried about the price of your digital product? Don't worry about it. Numerous creators, and even those who've been playing the game for some time have a difficult time determining the ideal price for their digital goods.
There isn't a universally-fit-all pricing plan for digital goods. The strategy is based on a variety of factors including the nature of your digital product as well as the customers you serve as well as the value you offer to prospective customers.
In this piece, we'll discuss about everything you need to think about in deciding how much you can price your digital goods.
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How to determine an appropriate price for your digital products
Pricing can be challenging. By following these steps, you will help make it easier for you.
Find out how much your intended audience will be willing to spend
The amount that your potential customer will expect to spend can help to determine a price that is in line with their needs. If the audience you are targeting will pay $100 USD for an ebook but selling it for 300 USD takes your book out of market. On the flip side If you expect them to shell out $300 USD for an ebook, and you're selling it for 100 USD They might consider your book to be low-quality and will not buy it.
There are three steps in finding the perfect audience's pricing location.
Conduct a survey of the population
A survey online about demographics could help you gather information about the social habits of your customers including their education and income levels as well as their jobs. What you learn can be used to identify the amount that your clients spend. For example, the higher you can estimate the income that is available to your targeted market, the higher chance to purchase high-end digital products.
Respondents to your poll may aren't willing to reveal the details of their income. This is why you need to make sure your questions are in an open-ended structure and provide an array of options. Here is an illustration
What do you make in a month?
- A little less than $1,000
- $1,000 - $3,000
- $3,000 - $5,000
- greater than $5,000
The survey could be administered via a person-to-person survey or online. You can also create a questionnaire by using questionnaire builders for free like Google Forms.
Determine your target audience's pain point(s)
Concentrate on two points to this post:
- Your readers are desperate to find a solution for the problem.
- Value of solving the issue
If your issue is just a minor inconvenience and your clients would choose not to invest a lot of money to find a solution. If the problem is creating significant loss and they are willing to pay whatever it costs for the solution.
Similar logic applies for ROI. If the audience you want to target can gain significant benefits through the solution for their problem, they'll inclined to pay the best amount for the solution. If the solution to their problem adds minimal or no difference to their lives, they'll not think of a good reason for buying an expensive item.
It is possible to listen to conversation of your followers about their pain points to find out what their feelings are about the subject. Begin by checking out conversations on social media using platforms for listening to social media like Mention. Then, take things another step by scheduling one-on-one conversations with your audience for direct feedback on your pain points.
Find out about your competition
Learn what other companies cost to find out what their primary pricing in the market is.
All courses cost around 100 to 150 dollars for courses; pricing your program at a higher cost could turn off prospective clients, until you demonstrate that your product is more effective that what's on the market. If they provide discounts, it's a sign to include a similar offering as part of your pricing plan.
Competitor pricing research is an easy process. Start by identifying the three to five digital artists that are selling similar goods. Go to their websites or the specific websites that sell digital products to find out how much they charge for the items.
Beyond the numbers, take a look at the overall offerings. Do they charge a premium but allow customers to make payments over time? Do they offer electronic bundles which help consumers save money when they purchase? These insights will help you determine their pricing strategy and form your own pricing strategies.
Find out the price of production
Pricing must be based on your production expenses at the bare minimum. Otherwise it's a risk of losing business. Pricing is a highly precise procedure because you have make sure you are doing it the right way. If you use the wrong numbers, you may end up offering your digital products at a cost.
Add the direct cost of your purchase
They are the costs incurred during production. Examples include freelancer charges as well as hosting costs for websites and software subscription costs. If you've completed the initial draft of your ebook yourself, then multiply the number of hours that you've put into it by the amount of your hourly wage and add that amount to the expenses directly.
Find your indirect costs
They're expenses that aren't directly tied to a particular product but contribute to the production process. This includes the money spent on your co-working space Internet memberships, power and co-working space bills. In addition, include the wages or the salaries of employees that aren't directly associated with the manufacturing process, but are part of the entire process such as you're virtual assistant.
Take your fixed expenses and add them up.
These are the operating expenses will be incurred by a company regardless of whether or not you're creating the product digitally. Examples include taxes, the cost of insurance, interest on loans and other administrative expenses.
Add up all the costs
All costs must be taken into consideration in the total amount of creation. If the costs for a creator are:
Indirect costs Indirect costs: $2,500
Direct cost Cost direct: $1500
Fixed costs Fixed costs of $800
The cost total will be $5,500. That means that you must offer at least $5k worth of your digital item in order cover these costs and break even.
Your profit margin can be set.
Profit margin is the amount of money you want to earn from sale. Consider it the ROI of your online product. It is calculated as:
(Total Revenue - Total Costs) * Total Costs 100
Let's say you earn $6,000 in revenue from the sale of your digital item the entire cost of producing is $5,000. Your profit margin would be:
($6,000 $5,000) * $5,500 x 100 = 20 percent
A good profit margin should be between 10 and 20 percent of the total cost. It is possible to make it higher, but you should strive to keep this number at a minimum.
Choose your pricing model
Making a decision on a price can be something else, but how you present it to your customers is another matter entirely. Your pricing might be different from what your competition is charging, but with the right pricing strategy, you can get the attention of your clients.
If you are an author, you have many price options. Take a look at the most widely used types.
Subscriptions
Subscription pricing will require clients to pay a regular fee in regular intervals such as each month or every quarterto gain access to and use the online product. Customers are denied access to the digital product once they have cancelled their subscription or do not renew their subscription.
Peak Freelance is a great model of a subscription-based online product. With a monthly $49.95, customers have access to an exclusive library of workshops, connect with fellow freelancers and join in group work sessions. There are many other benefits.
Subscription model best practices
If you decide to offer the option of subscription-based pricing for your product, ensure that:
- Your product can be considered as having real-time value. People won't see the necessity for a subscription fee when they can benefit from your service once.
- It's easy for customers to sign-up and renew their subscriptions.
- This content is exclusive to you and will encourage clients to pay for it.
One-time payment
As the name suggests it is a one-time transaction where users make a one-time payment of a specific amount in order for access to the digital content. This is ideal for items that have fixed content-like textbooks, course materials, as well as recorded webinars. When they pay the one-time price for the item, users get unlimited access to the content. They can access the material repeatedly at their own speed and schedule.
The product which is an one-time payment method usually have higher rates than subscription-based ones since they do not have regular.
Let's say a creator spends $4,000 to create a digital product. If they sell the product for $10, and have 50 customers, they will make $6,000 over the course of a single year with the subscription model. In a model that allows for one-time payments the business will earn 500 dollars. The company will have to increase the price per item or offer it to 600 potential buyers with an additional $6,000.
The leader in content marketing, Ryan Law, employs the concept of a one-time cost for his online products. His courses include how to Edit and How to Write Thought Leadership Articles, cost between $199 and $99 respectively.
One-time payment best practices
To get the maximum benefit of a one-time payment to get the most value from a one-time payment
- You can find a fair cost, allowing you to make cash quickly.
- Seek out ways to cross-sell and upsell your product to increase the amount of money you earn. For instance it is possible to launch an update to your product online to boost sales.
- Deliver value to increase word-of-mouth recommendations.
Freemium
The model of freemium pricing combines aspects of "free" and "premium." This means offering a basic version of digital goods free of charge, while giving users the option to upgrade to an upgraded, feature-rich version, for the cost of.
One excellent example can be found in Jimmy Daly's Superpath group of professionals in marketing. The members can join free and have access to the basic channels, such as advertisements and job postings. Anyone who wants to gain access additional content that is edited by the community will are required to pay $20 per month in order to gain access to premium channels.
The freemium is a good choice for any digital item. For example, if you're selling a book You can provide a stripped-down version (like a chapter) at no cost and you can charge a fee for the complete content. In the case of an online course, it's possible to allow viewers to view the initial 10 minutes of your video free of charge and also make an additional charge for watching the entire film.
Freemium model best practices
If you choose to use freemium pricing for your product ensure that you:
- The free version of the software will be able to draw and hold on to clients.
- Premium products are worth paying for. In the sense that it's superior to the basic version.
- Your site clearly explains distinctions between the paid and free version of the digital items.
Tiered pricing
Pricing with a tiered structure allows you to provide distinct prices for the advantages or functions the product offers. It's a good way to capture various market segments as well as earn additional revenue. When you're selling a coach program, you can do this by establishing a pricing structure. The pricing structure could look something like this:
Level 1: 30 mins of coaching for $100
Tier 2.30 minutes of coaching plus one follow-up phone call valued at $175.
3. 1-hour coaching and access to the coaching community for $300
Jay Acunzo and Melanie Deziel implement tiered pricing for their membership community: Creator Kitchen. The members can choose between a $1,299 per annum basic membership plan, or a $299 restricted VIP plan.
Tiered pricing best practices
This is how you can set up the tiered pricing for your digital item in a successful manner.
- Your lowest price level should be able to offer the product's value. For instance, if you're selling an eBook those who purchase for the lowest price should be able to access the whole books.
- The tiers you choose to use are based on the needs and preferences of your customers, not only on your internal expenses.
- Avoid having multiple levels to prevent confusion for your customers.
- Let clients switch from one from one to the next.
Select your pricing promotion plan
Once you've set a price for your digital product it's time to put your product on the market and see how people feel about it. To do this, you'll require a pricing strategy that will allow you to secure early momentum and also revenue for your digital item.
You can:
Offer a discount
Customers can purchase the product for discounted prices for a limited duration. Here's an example from the leader in content marketing Ryan Law:
Although offering discounts that are substantial may be a draw for attention, overdoing it could devalue your product, and reduce the margins of your profits. Find a way to strike a balance between drawing customers into your business and protecting its worth.
Allow customers to make their payments in installments
If you're selling a middleor expensive item the installment option can be a great way to attract customers who otherwise would not be able to afford the cost of your item. The amount you pay during the period of instalment will be slightly more than the cost of your digital products.
Here's what Jacob Mcmillen does this off during his course in copywriting:
Bundles of offers
Bundling is the process of putting related items together and reselling the bundle at a lower cost compared to purchasing each product individually. Imagine you launch the membership, ebook, and consultation service. These are priced at 600 dollars each. You can create 3 bundles with a price of $450.
Find out how Melissa Steginus does it off.
Bundling can be a great option to market items that haven't seen much successes on the market. The possibility of recovering some money from them is better then being totally wiped out.
Develop your product and pricing plan in order to keep up with market developments.
The market you are in doesn't seem to be stable. The shifts in preferences among consumers, economic factors, and technological advances can affect the market demand for your product or services and the prices that your customers are likely to be willing to pay. The sudden downturn in the economy can erode the buying potential of your targeted audience and make them less likely to buy your costly digital item.
Keep track of the conditions to ensure that you are on top of trends and can adjust pricing in line with the changing market conditions. Once you have realized that customers enjoy high-tech technology (hello AI, hello! ) Make sure to update your digital item with pertinent details about the technologies to stay current.
There's not a universal method for pricing. Listen to your audience and stay up-to-date with the latest trends in the market and open to change and that's how you find your pricing right!
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