Quote: (11-24-2017 06:31 AM)Suits Wrote:
I've been wrestling in my head the last several days about product price points of my upcoming product release.
It's a digitally distributed product, meaning that it's about the easiest thing in the world to copy. My plan is to bundle it with online tools and marketing features (that can't be copied) and offer both for a monthly rate. In other words, you'd have to pay a monthly subscription fee to access the product. The risk is that folks will simply pay for one month, get all of the digital product elements and then cancel the subscription, which leaves me in a bit of a pickle.
(A) If I charge a high monthly fee, people are going to be even more likely want to steal the product, because paying the monthly fee every month may be far more than people will want to pay for the product's subscription based tools and marketing benefits.
(B) If I charge a lower monthly fee, it'll be low enough that I'll be more or less fucked if people still cancel the subscription after one month. I can deal with this by requiring them to pay a full year in advance, but this will push up the initial minimum required payment well beyond the comfortable range for impulse purchases.
Thanks for all the feedback on my original post on this topic (quoted above. The responses were very helpful for brain-storming about what approach to use when I start selling my first product soon.
I write this post to share the current direction of my thinking on the topic and to hopefully continue the discussion regarding pricing products, both in my specific case and in general.
Recently, I came to the tentative conclusion that it would be better to price each of my products higher rather than lower. I was initially thinking that a price tag of $20 per course was such a steal that I'd gain enough volume from impulse-buys to make up for the low price tag. My product cost is about $0.02 because it is a digital product.
However, with some more thought, I realized that my target consumer can't be someone who is looking or specifically motivated by a cheap product. Because the nature of the product (digital materials designed to be turned into an analogue product by the user with a desktop printer), only someone willing to invest in a decent colour photo-printer would be interested in the product (because the product is almost useless so long as it remains purely digital).
Therefore, I concluded that I should price each product at around $80 and include great value and target the dedicated professional (and companies too) that is serious about their work and willing to invest money into something that makes their job much easier.
At $80 per unit, I only need to get 1 customer to earn the same money I would at $20 per unit, so even if volume is significantly lower, it might not hurt me at all.
Better yet, at $20 per unit, it will be a lot harder to set a respect monthly fee for continued service after the included service period expired. I'm planning on including a year of service with each purchase of the course material itself.
At $20 per product, I could not reasonably charge more than $10 per year for continued service after the included period ended, but at $80 for the product itself, $5 per month is more reasonable, not money customers will miss (so they'll let the auto-credit card payments continue until the card expires), but will net me an extra $60 per year per customer.
The product is definitely worth $80 per unit. I use it myself and would happily turn over that much money (or more). For the target user, that's the same money they can make in less than two hours of work. The product will save those users dozens of hours in annoying prep work (each $80 product represents well over a hundred hours of work for me, not including product testing).
Another motivation is that pricing it at $20 per unit, would pretty much preclude the option of making non-automated sales. $20 per unit isn't bad for an online sale that requires me to just build the system and maintain it, but dedicating my time to making sales by talking to people or even corresponding by email just wouldn't be justifiable. If each sale required only one hour of effort on my part (and it would probably require more), I'd be getting just $20 of income per hour of work and I can earn far better money doing other things with my time (I bill consulting clients $50+ per hour).
Having a base product selling for $80 makes more sense when it comes to doing non-automated sales. If the basic version is selling for $80 and can have another version targeted at companies that includes more features and sells for $200. Or a bundle of several products that sells for $200. I'd be more than happy to spend a day doing sales work if it led to earning $200 and that's also a level of revenue that may justify hiring sales staff. If an advanced-featured product bundle sold for $500, then I'd only have to sell 4 per month to maintain a basic lifestyle in an affordable city, which would allow me to more or less work full-time at further building my product lines.
Thoughts?