Does Offering a Low-End Version of Your Product Hurt Sales of Your Premium Product?
Don't you hate when you ask a “marketing expert” a question—
And they reply with something like, “That might work, but you'd have to test it to know for sure”?
Sometimes that IS just a copout.
Many times, though, it's just the honest truth.
Case in point:
Last week I mentioned how I'm trying a “tiered pricing” experiment with our flagship course, “How to Market Yourself as a Software Developer.”
So last week I carved out a day and updated the sales page to offer 3 different price points: $99, $199, and the original $299.
At each higher price point, you get progressively more content—more books and videos.
In theory this should maximize sales and revenue, because there are developers who will spend $99 to advance their career but not $199 or $299.
But theory is theory, and results are results, right?
Well the page has been up for about a week now, and the results are NOT what I expected at all.
One worry I had about this approach is that offering more choice can sometimes hurt your sales, as people can get hung up deciding between the options and wind up doing nothing.
And for his part, my business partner John was concerned that offering the lower tiers would bleed off sales from the high-end offer—we'd make more sales but less money overall.
So far NEITHER of these fears have played out.
For starters, offering 3 choices instead of 1 hasn't reduced our sales—in fact it seems to have increased them.
And in a zippy and unexpected twist, not a SINGLE customer has opted for the lower-priced options.
EVERYONE is opting to pay full price to get the top tier.
Now it's tempting to just spike the football and cue the end zone happy dance—after all, didn't I just increased the sales of our high-end product?
But I'm not ready to celebrate yet.
Instead I'm eying up the data, and what I've learned so far is:
1. Customers don't see enough value in the lower-end packages to justify the price I'm charging, and
2. Customers clearly think the high-end package is easily worth what I'm charging—if not more.
So here's what I plan to do next:
1. Drop the price of the low-end product, probably to $49.
2. Increase the price of the high-end product, probably to $399 (or 4 monthly payments of $99 instead of just 3).
At SOME point I should start seeing sales on all 3 tiers.
And at that point I can start fine-tuning the pricing and adding and subtracting value from each package until we hit the sweet spot.
More updates forthcoming!